Let’s dive deep into the  Final Code of Practice under the Fair Tips Act, which has been officially released by the Department of Business and Trade this afternoon (Monday 22nd April). Originally scheduled for implementation from July 1, 2024, the start date has now been shifted to October 1, which we imagine is designed to give operators additional time to prepare!

The changes in the new code are significant and aim to increase transparency and fairness in how tips are distributed not just within the hospitality sector but also in other tipped industries. Throughout the development of this code, TiPJAR has been working closely with the Department of Business and Trade. Our goal has been to lend our industry expertise to help shape a framework that addresses the needs of both workers and businesses effectively.

Highlights of the Final Code of Practice:

• Clarification on Agency Workers: The updated legislation clarifies that for the purposes of tip allocation, the ’employer’ is regarded as the business that hires the agency worker. If tips are passed to Agencies for payment to workers, the Agency retains the obligation to ensure no deductions from tips (aside from income tax). This ensures that agency workers are treated equitably in line with directly employed staff concerning tip distribution.
• Emphasis on Hours Worked: The code now includes hours worked during the period that tips were received as a factor to consider in businesses implementing a ‘fair’ distribution under the legislation.
• Encouragement for Worker Consultation: The code strongly advises employers to engage with their workforce in developing tipping policies and reinforces that team members’ view of “fairness” will be a consideration.
• Exclusion of Digital Direct Tips: Tips collected digitally, directly from customers to staff, are not considered employer-received tips and are out of scope, subject to correct operation of these platforms and relevant HMRC guidance.
• Anti-Discrimination Safeguards: Strengthened provisions to prevent any form of discrimination in the distribution of tips, ensuring fairness for all employees regardless of background or characteristics.
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We are honoured to have consulted on this vital Code of Practice, which clarifies how employers should handle tips passed to their dedicated teams. At TiPJAR, we are dedicated to promoting fairness and transparency in tip distribution, and we believe this Act will greatly benefit millions of tipped workers and help level the playing field across various sectors. We are excited to support businesses as they navigate these changes and seize the opportunities they bring.

The legislation mandates that all tips and service charges be distributed to staff without deductions, requiring businesses to adopt a clear and equitable distribution system. This reflects a broader legislative acknowledgment of the hard work by industry employees and aims to safeguard their earnings.

Further Insights from the New Code:

• Handling of Non-Monetary Tips: The code provides guidelines for the fair distribution of non-monetary gratuities, like vouchers and service tokens, ensuring they are assessed for their monetary value and shared appropriately.

• Record-Keeping Best Practices: Businesses must now keep detailed records of all tips received and their distribution for three years. TiPJAR offers solutions to help businesses maintain these records accurately and securely.

• Support Systems for Workers: In collaboration with industry partners, TiPJAR is set to facilitate access to information and advice to help workers understand their rights under the new legislation and how to address concerns.

• Industry-Wide Collaboration and Education: We are initiating collaborations with hospitality associations to offer educational programs about the new code, preparing the industry to adopt these improved standards.

• Feedback and Continuous Improvement: We are establishing channels to gather feedback from both employers and employees on the effectiveness of the new practices, which will guide any necessary adjustments or updates in collaboration with the Department of Business and Trade.

At TiPJAR, we are committed to ensuring a seamless transition to the updated tipping practices and helping our industry embrace a fairer, more transparent future.