The new Tipping Act, which comes into effect this month, is aimed at ensuring fairer treatment for workers in industries where tipping is common, such as hospitality and services. The Act was introduced to address long-standing concerns about how tips are distributed, ensuring workers receive the gratuities intended for them by customers.
Key Highlights of the Tipping Act:
- Direct Allocation of Tips: Under the new law, all tips, service charges, and gratuities must go directly to workers, without interference from employers. Employers are prohibited from taking any portion of tips, which historically has been a controversial practice in some businesses.
- Digital Payments Included: The Act covers not just cash tips but also those made via card payments. With the increasing shift towards digital transactions, this ensures that workers benefit from tips regardless of the payment method used by customers.
- Transparent Tip Distribution: Employers are required to implement a fair and transparent process for distributing tips. This ensures that all staff members, including those who work behind the scenes such as kitchen staff, receive a fair share of the tips earned.
- Record-Keeping: Businesses must maintain detailed records of how tips are allocated and distributed, and workers have the right to request this information. Please note that tips being taxable and cannot be used to make pay up to minimum wage (therefore the payslip ideally should distinguish between the basic salary and tips).
Impact on Workers and Businesses
For workers, this Tipping Act is a win. It guarantees that tips left by appreciative customers go to those who provided the service. For businesses, the Tipping Act means you’ll need to review and possible update your internal processes to ensure that you comply with the new rules.
If you need help in looking at how you can implement these procedures fairly and producing a policy that details your approach, don’t hesitate to get in touch with us: hello@risehr.co.uk