Employers must pass on tips to employees from 1 October 2024

From 1 October 2024, it is illegal for employers to withhold tips from staff.

The Employment (Allocation of Tips) Act 2023 received Royal Assent in May 2023 and came in to force via secondary legislation on 1 October 2024. 

Employers now have to pass tips on to workers, and also have a tipping policy in place where tips are left more than occasionally.

In addition, workers have a new right to request a copy of their tipping record, in order to enable them to bring a claim to an employment tribunal where they believe they are not receiving tips they should be.

New code of practice

Employers must have regard to a statutory Code of Practice when distributing tips.

In addition, the government has also recently issued non-statutory guidance which states:

• tips cannot be pooled across different sites or branches.
• employers must have regard to agency workers when distributing tips.
• employers are responsible for making clear which roles are covered for the allocation of tips, particularly those involved in providing direct service to customers.

Workers in the hospitality sector in particular rely on tips to supplement their pay, but can be powerless to do anything where employers do not pass on service charges from customers.

The new rules make it unlawful for employers to keep such service charges from their employees.

To ensure compliance with the legislation, some employers may decide to appoint a tronc operator to distribute tips. Staff will be able to complain about tip allocation for up to 12 months after an issue.

The legislation requires employers to pass tips on to workers by the end of the month following the month in which the tip was left.

There are many ways to tip and the new rules shouldn't interfere with that. The new code of practice does not cover tipping apps which pay out to workers directly, bypassing the employer.

Tips cannot be used to count towards minimum wage pay; this has been the case since 2009.

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