The Employment (Allocation of Tips) Act 2023, referred to as the Tipping Act, is expected to come into effect on 1 July 2024, and will make it unlawful for employers to withhold tips from workers.
The Tipping Act received Royal Assent in May 2023, and states that businesses will no longer be able to keep tips from their staff, and will be required to make sure that all employees receive their tips in full – with very few exceptions where this does not apply. As the new act is set to come into effect on 1 July 2024 here’s what you need to know about the Tipping Act to ensure your salon business operates legally…
Why was the Tipping Act introduced?
The desired outcome of the Tipping Act is to improve fairness for workers by ensuring that the tips consumers leave in recognition of good service and hard work are going to the workers as intended. The Act aims to increase fairness in tipping practices and create a level playing field for employers who already allocate all tips to workers by ensuring that all employers follow the same rules.
What effects will the Tipping Act have?
- Withholding tips from staff will become unlawful – employers must pass on tips to workers without any deductions. This means an estimated £200 million a year will go back into the pockets of hard-working staff by retaining tips that would have otherwise been deducted.
- Tips must be allocated and paid to workers no later than the end of the month following the month they were received from the customer. For example, tips received any day in May must be allocated and paid by the end of June.
- Employers should have a written policy on tips and record how they manage tips.
- Workers will have rights to request information about an employer’s tipping record – this will allow them to bring credible claims to an Employment Tribunal.
Factors to Consider
- Allocating and distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers. There may be legitimate reasons why employers choose to allocate different workers different proportions of tips.
- Employers should use a clear and objective set of factors to determine the allocation and distribution of tips. The choice of factors should be fair and reasonable given the circumstances and the nature of the individual business.]
- Employers must avoid any form of unlawful discrimination when selecting and applying the factors for allocating and distributing tips.
- If a business owner has more than one salon or spa, all tips paid at a single salon must be allocated only to workers at that salon.
You can find out more about the Tipping Act here.
While you’re here, why not also check out what the Spring Budget means for barbers?