This Act is expected to come into force from May 2024.
What do we need to know?
Employers must ensure that 100% of all customer tips, including those paid by credit card, are distributed to staff without any deductions. In particular, it will be unlawful to deduct bank or administrative charges from tips.
Payment of tips must be made in full to staff no later than the end of the month in which the tip was paid by the customer.
This law applies to all employees and workers including agency staff and zero-hours workers.
Employers will be required to have a written policy on distribution of tips to staff. A statutory Code of Practice will be published before the end of 2023.
What do we need to do to prepare?
Businesses in affected sectors must be ready to hit the ground running when this change comes into force.
Look at existing payroll systems and practices on tips and work out what, if anything, needs to change.
Consider voluntary compliance at this stage. This is now commonplace and helps to attract staff in a competitive labour market.
Prepare your written policy on tips once the Code of Practice is published.
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