The new Employment (Allocation of Tips) Act 2023 comes into force tomorrow, creating new rules around how tips, gratuities, and service charges are collected, allocated, and distributed among your staff.
From October 1st you will need to have a written policy in place that includes information on how your tips are distributed and shared. Failure to produce this could potentially result in claims of up to £5000 per employee.
Key points to note are:
- All customer cash tips and service charges are to be kept by restaurant employees in full.
- All tips and service charge payments collected by the company, whether by credit card, debit card, or payment via digital platforms (collectively referred to as “tronc”) are to be distributed in full to employees without deduction (with the exception of tax)
- All employees should have an opportunity to vote anonymously on how they wish tronc to be distributed in the business.
- Any tronc payment is paid in addition to National Minimum Wage and National Living Wage.
- The business can not charge any administration fees or make any other company deductions from tips.
- The business must keep a record of all tips, and employees have a right to request information about the tipping record once every three months. If an employee does request a copy of the tipping records, the business must comply with this request no later than four weeks from the date it was requested.
- All tip payments are paid to staff within one month of the end of the month during which they were received.
The act gives workers the right to request information about an employer’s tipping record and bring claims to an employment tribunal over tipping breaches within 12 months. Employers could then be forced to reallocate tips and pay up to £5,000 in compensation for every worker affected.
For more information visit the gov.uk website