New legislation on tipping

The Government has finally published its response to a consultation on tipping that was originally published in 2016. In publishing the response (attached) it has announced that it will introduce legislation to ensure tips, gratuities and service charges go to workers in full as part of an upcoming Employment Bill. The new legislation will include:

  • Requirements for employers in all sectors to not make any deductions from tips received by their staff, including admin charges, other than those required by tax law.
  • Requirements for employers to distribute tips in a way that is fair and transparent, with a written policy on tips, and a record of how tips have been dealt with. Employers will be able to distribute tips via a tronc, and a tip must be dealt with no later than the end of the month following the month in which it was paid by the customer.
  • Provisions to allow workers to make a request for information relating to an employer’s tipping record. Employers will have flexibility how to design and communicate a tipping record, but should respond within four weeks.
  • Requirements for employers to have regard to a statutory Code of Practice on Tipping.
  • Where employers fail to comply with these measures, this will be enabled through Employment Tribunal.

There is no date yet set for the Employment Bill and the stated expectation is that the commencement date for the legislation will be a year after it has been enacted – so it will probably be around 18 months before the legislation come into effect. However, it would be prudent in terms of employee relations for businesses to review their systems for distributing tips and gratuities now rather than waiting until the last possible moment.

It is also important to note that the legislation will apply to all sectors so it will apply to businesses were people tip guides, coach drivers, reps, entertainers or people operating onsite facilities such as hairdressers as well as the usual hospitality sector businesses.