Employment Rights Bill: Making tips & gratuities fairer for workers

The Employment Rights Bill will aim to make tips and gratuities fairer for workers, bringing changes to the way in which employers handle and deal with them.

On 1 October 2024, The Allocation of Tips Act (‘the act’) and its accompanying code of practice on the Fair and Transparent Distribution of Tips came into force.

Under the act, only tips that an employer receives or has influence/control over are included.

The act requires employers, when handling monetary and non-monetary tips, to:

• allocate qualifying tips in full, without unlawful deduction, in a way that is fair and transparent
• distribute qualifying tips before the end of the following month
• have an adequate policy in place that is accessible to all workers (including agency workers)
• maintain a record of all qualifying tips, and how they were distributed for three years following the date they were received.

The Employment Rights Bill proposes to strengthen the act by requiring employers who are seeking to amend the relevant policy to adequately consult with either trade unions, elected representatives or workers who are engaged at the time of drafting the relevant policy.

They will also have a duty to keep a recorded summary of the views expressed during the consultation and provide it to workers who request sight of it. Additionally, employers will be required to carry out an internal review of this policy every three years.

If an employer fails to adequately consult with their workers or adhere to these changes, they may face an employment tribunal claim/fine of up to £5,000 for any financial loss caused as a result of their non-adherence.

What should you do?

In anticipation of these changes, it is important that you consult with all workers and keep an accurate, accessible record of what is discussed during the consultation. We suggest having somebody present to take notes, and a copy is provided to all workers after the discussion to ensure they are satisfied with the summary produced.

We will be covering each new change following the Employment Rights Bill, looking into the details of what could impact you and your business. Keep an eye out on our website and across our social media as we publish our full set of informative articles that will help you understand the changes employers are about to face.

If you have any questions about tips and gratuities, or need assistance preparing for the new Employment Rights Bill, be sure to get in touch – our expert team will be willing to help.

Our Legal 500-rated employment law & business immigration team are experts in guiding businesses of all sizes and backgrounds through a range of issues that may arise.