COMPLIANCE
All change for tipping as new legislation draws closer
The Employment (Allocation of Tips) Act will take effect on 1 July 2024, and all hospitality businesses must be ready, so Peter Davies, managing director, WMT Troncmaster Services Ltd, talks us through some of the key considerations for impacted organisations
I t’s been over seven years since government first announced its intention to introduce legislation regarding how tips, gratuities and service charges paid by customers must be dealt with. The resulting Bill was passed by Parliament and received Royal Assent earlier this year. The legislation will take effect on 1 July 2024, following a public consultation on an accompanying statutory Code of Practice. The Employment (Allocation of Tips) Act will affect all hospitality businesses and even those who believe they’re already doing ‘the right thing’ will need to take note. New obligations on businesses
and new rights for workers are being introduced, and failure to be prepared could result in an expensive employment tribunal claim. It’s important to note that the Act isn’t retrospective and will only apply to monies paid on or after the date it takes effect. Nor will it change or affect arrangements agreed and entered into beforehand. What’s covered? All payments of discretionary service charges, all tips paid to a business as a part of a card transaction, cash tips which are collected and managed by a business and all app payments (including third party
tip apps) where the money doesn’t go directly to the employee are covered by the Act. These are designated as ‘employer received tips’ but are simply referred to as ‘tips’ in this article. The Act doesn’t cover cash tips retained directly by staff / pooled and dealt with informally on a daily basis without control by the business, or tips paid by app where the money goes in full direct to the worker. No charges, administration or deductions 100% of the face value as paid by the customer must go to staff. Businesses aren’t allowed to deduct, charge or retain
| Professional in Payroll, Pensions and Reward | February 2024 | Issue 97 20
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