Legal: Tipping Code of Practice explained

Amy Stokes, employment partner at national law firm TLT, details the latest from government.

The new Tipping Code of Practice on the fair and transparent distribution of tips that will have legal effect under the Employment (Allocation of Tips) Act 2023, was published and laid before parliament on 22 April. 

As reported by Pub & Bar, the measures have now been delayed and are expected to come into force on 1 October 2024. This is pushed back from July as originally planned. This allows businesses more time for implementation. 

The formal government response to the public consultation setting out the feedback received during the consultation, the government’s response and next steps have also now been published.

The Code of Practice will be statutory and have legal effect, meaning it can be introduced as evidence in an employment tribunal.

This has the effect of making it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned once they have been approved by parliament.

The key updates in the new code include:

  • For agency workers, the 'employer' for the purpose of tip allocation is the business that hires the agency worker. If tips are paid to the agency, the agency is responsive for passing this onto the workers without unauthorised deductions.
  • When businesses are considering how to distribute tips fairly, the Code now also includes hours worked during the period when tips are received as one of the factor which may be considered. 
  • Tips collected digitally and paid directly from customers to staff are out of scope for the legislation as, like cash tips handed to staff, they are not 'employer-received tips'.
  • A focus on consultation with staff as being important in determining fair allocation.
  • A strengthened anti-discrimination warning, including the risk of unintentional indirect discrimination in the distribution of tips. 

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