Employment (Allocation of Tips) Bill 

As the Employment (Allocation of Tips) Bill makes its way through Parliament, it is important to understand what the new Code of Practice to be issued by the Secretary of State would mean, especially for the hospitality, leisure and service sectors. 

The Bill was introduced by Dean Russell MP and is currently being backed by the government. The Bill is designed to protect potentially millions of workers whereby when tips are paid by customers to the employer, unfortunately these tips are not passed on to the employees who earned them. 

It might be this Bill is receiving extra support with some vigour now, due to the current cost of living crisis, supported by Business Minister Jane Hunt who said, 

 “At a time when people are feeling the squeeze with rising costs, it is simply not right that employers are withholding tips from their hard-working employees. 

Whether you are pulling pints or greeting guests, today’s reforms will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it. 

I particularly want to tip my hat to the work of Dean Russell MP and all the campaigners who have helped make the Tipping Bill a reality.” 

The Bill also has support from the UK Hospitality CEO, Kare Nicholls who recognises this could boost the “take-home” cash for employees in this sector and may also aid with the recruitment and retention in this sector, which is still experiencing recruitment difficulties. 

The Bill highlights the Code of Practice to be issued to help guide employers on how to promote fairness and transparency in relation to the distribution of qualifying tip, gratuities and service charges; this is slightly different to saying it is law they must do this, however without such a policy in place an employee could take further action via an employment tribunal. 

Employers will need to keep records the amount of qualifying tips, gratuities and service charges paid; how these were fairly allocated to workers. These records will need to be kept for a minimum of three years after the first payment was made. 

It is good to know that where a  TRONC scheme is in place, this will, under the Code of Practice be viewed as complying with this Bill, providing it is being run as the legislation intends. 

Regardless of whether a TRONC is in place, tips  attract income tax and sometimes also National Insurance contributions. 

Should this future Code of Practice impact your business, or if you would like to discuss the topic of tips, gratuities and service fees, or the setting up of a TRONC scheme, please don’t hesitate to contact Karen Thomson at karen.thomson@aab.uk