The new Employment (Allocation of Tips) Act 2023 means that it will soon be illegal for an employer to withhold tips from its employees.
As the festive season approaches, here’s a recap on the law due to come into force early in 2024.
We look at this from 3 aspects –
1 Businesses
A Code of Practice is being drawn up, but the new Act means that employers will be legally obliged to
– fairly allocate to staff all qualifying tips, gratuities and service charges,
– ensure that they are paid to workers without any deductions,
– no later than the end of the following month after the receipt from the customer.
The legislation applies to both public and non-public places of business.
Policy and record-keeping
The Code of Practice will set out what defines ‘qualifying tips etc.’ and what would be a ‘fair allocation’. Businesses will need a written policy, available to staff, that shows how it deals with tips, gratuities and service charges. Records which detail how and when payments have been made should also be kept for a three-year period.
2 Staff
For agency and salaried staff, the Act means there is fairness and transparency in terms of payment. With less cash used, it can sometimes be unclear what happens to discretional payments for good service.
3 Customers
With the new law, when customers extend thanks to staff they can be confident that they will get their gratuity.