From 1st October 2024, employers will be required to pass on all their tips to their staff evenly, keeping nothing back for the employers.
A tip includes both employer-received and worker-received tips.
- Employer-received – service charge that gets added onto a bill at a restaurant.
- Worker-received – cash tip placed into the hands of a waiter/waitress.
Any tip that an employer has any control over is called a qualifying tip and it’s these tips that form the basis of the new law. So, if a worker-received tip is collected by the employer and distributed to all the staff, then that’s a qualifying tip. Tips left in the hands of the waiter/waitress are NOT qualifying tips.
What must be done on qualifying tips?
- A business must have regard to the code of practice on fair and transparent distribution of tips.
- The code should consider various factors such as type of role/work, employees length of service, customer intention, etc…
- A broad agreement reached with all staff.
- A written policy produced outlining the process.
Are there any employers who do not need a tips policy?
Yes, those who receive qualifying tips only on an occasional and exceptional basis. But a written statement is still required to the effect that they are not required by law to produce a policy.
Also, those employers who allow all employees to keep all their tips, all of the time; but again, a written statement should also be produced.
Basically, if you receive tips from customers, or add a service charge to your bills, then you should take appropriate HR advice immediately if you haven’t already. Employers who fail to take notice of this run the risk of being taken to an employment tribunal.