The Employment (Allocation of Tips) Act is Here!
Life beyond the tipping legislation: The exciting road ahead for hospitality
A Thought Leadership by Dan Hawkie, CCO of TiPJAR
As of October 1st, it’s official: The Employment (Allocation of Tips) Act is now live! The changes in the new legislation are significant, aiming to bring much-needed transparency and fairness to how tips are distributed across the hospitality sector and other tipped industries. Throughout the development of this act, TiPJAR has been collaborating closely with the Department for Business and Trade, lending our expertise to help shape a framework that truly meets the needs of both workers and businesses.
For those looking for a deeper dive into the specifics, we’ve created a range of resources you can access here. But now that the Fair Tips Act is in effect, it’s not just about compliance; it’s about embracing this change and understanding the broader benefits it brings.
A win-win for businesses and employees alike
The new tipping legislation is not just a legal obligation but a powerful opportunity for operators to build stronger, more motivated teams. Yes, there are potential penalties for non-compliance, but let’s focus on the opportunities:
- Guidance: For far too long, there hasn’t been a level playing field regarding how operators manage tips or tronc, which has meant those that are doing the right thing, haven’t always reaped the rewards in the same way as operators that may have mismanaged these funds. Undoubtedly there are contentious issues with the legislation but at least everyone now must follow the same rules, and those that look after their teams fairly will inevitably come out on top.
- Better attraction and retention: Fair and transparent tipping practices are not just the law now, they can also be a powerful tool to attract, engage, and retain top talent.
- Cost savings: With a legitimate tronc policy in place, employers don’t pay national insurance on tips, which could save your business thousands.
- A more motivated team: By utilising technology, we have a much better opportunity to enhance our tronc policies to reward better performance. With service charge now being so widely used, it has unfortunately bred complacency in pockets of our sector, which has led to diminishing service levels. By rewarding team members appropriately for working busier shifts, providing better service and selling more, this is a great opportunity to stand out from your competition.
This is Just the Beginning…
The Fair Tips Act marks a significant shift, but there are still plenty of opportunities on the horizon. At TiPJAR, we’re excited to explore new ways to enhance the benefits of tipping for both employees and employers:
- A ‘bank-like’ savings pot: Imagine a separate pot where employees can save their tips with interest—like a digital piggy bank.
- A digital card: Making tips go further than ever before. A dedicated card for employees to spend their tips directly, with access to hundreds of high street discounts and cashback.
- Financial education: We believe in empowering employees with financial knowledge, helping them gain greater financial freedom and security.
We’re fortunate to work in a brilliant industry where we hear heartwarming stories of the impact that tips can have on people’s lives. Life beyond the legislation is an exciting place for both employers and employees, and TiPJAR will be there every step of the way to support.
So, embrace the change, explore the opportunities, and let’s work together to create a fairer, more transparent future for everyone in hospitality. Exciting times are ahead!
Millions to take home more cash as Tipping laws comes into force
Official Release from The Department for Business and Trade
Laws to ensure workers keep all of their hard-earned tips comes into effect
Changes expected to boost wages by putting £200 million back in the pockets of workers
Comes ahead of employment rights bill which will go further to strengthen workers rights and make work pay
From today [Tuesday 1st October], millions of hard working and dedicated workers will benefit from new laws which will ensure they keep 100% of the money they have earned through tips.
Introduced through a Private Members’ Bill last year, the Employment (Allocation of Tips) Act and the statutory Code of Practice on fair and transparent distribution of tips came into force today.
These changes will require employers to pass all tips, gratuities, and service charges on to workers, without deductions.
From today, if an employer breaks the law and retains tips, a worker will be able to bring a claim to an employment tribunal.
Most employers already pass on tips to the staff who earn them; however these laws will crack down on the minority of businesses who continue unacceptable tipping practices.
Employers in the wrong could be made to pay fines or compensation to staff, with workers able to hold bosses fully accountable through employment tribunals.
The Department for Business and Trade estimates that today’s changes will mean around £200 million will be received by workers that would otherwise have been retained by these employers.
It is hoped that this will build further trust between customers and businesses, as well as create a level playing field for all businesses through the fair and transparent distribution of tips across the board.
Minister for Employment Rights Justin Madders said:
“When you tip someone for good service, you expect them to keep all their tip. They did the work – they deserve the reward.
“This is just the first step of many in protecting workers and placing them at the heart of our economy. We will be introducing further measures on tipping to ensure workers get their fair share of tips.
“Britain’s outdated employment laws require an urgent update. This Government will ensure they are fit for the modern economy and deliver on our plan to Make Work Pay.”
This government will go even further to strengthen workers rights through our Employment Rights Bill which will ensure workplace rights are fit for a modern economy, empower working people and drive economic growth.
The legislation will be delivered in close partnership with business and civil society and will strike the right the balance between improving workers’ rights while supporting businesses across the country that pay people’s wages.
Andrew Tighe, Director of Strategy and Policy at the BBPA, said:
“This new framework will introduce a level playing field for all businesses, ensuring that those who were not already passing on all tips to their staff will now be required to.
“A greater a degree of consistency and transparency when dispersing tips will benefit both existing and new staff alike.
“We would urge all operators to review the guidance and ensure their policies are compliant with the legislation.”
Ben Thomas, CEO of TiPJAR, said:
“Our hospitality and service industries are powered by a wonderfully diverse and exceptionally talented workforce. For the first time, these millions of workers can trust that tips employers collect on their behalf will always be passed to them.
As a business providing a platform to get tips to workers quickly, fairly and transparently, we wholeheartedly welcome today’s announcement. We look forward to continuing our work with the DBT and government to develop further guidance as the principles of the legislation are put into practice, supporting businesses across the sector to operate to a consistent and equitable standard in handling tips.”
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