What You Need to Know About the New Allocation of Tips Act
- ruthbarrows
- Sep 1, 2024
- 2 min read
The new Employment (Allocation of Tips) Act 2023 is designed to make sure staff receive the money customers intended for them. From 1 October 2023, it will be unlawful for employers to withhold tips or service charges from workers. The change is expected to put an additional £200 million directly into the pockets of employees each year.
What’s Changing
Under the new law, employers must:
Pass on all tips and service charges to workers without making deductions.
Share tips in a way that is fair and transparent.
The law does not prescribe an exact formula for distribution. Instead, it allows businesses to
take into account factors such as:
Job role or responsibilities.
Basic pay levels.
Performance (individual or team).
Seniority or length of service.
Customer intention (where this is clear).
What Employers Need to Do
To comply with the Act, businesses must:
Put a written tipping policy in place.
Share that policy with all staff.
Keep records of how tips are distributed for at least three years (as employees have the right to request this information).
Engage with staff to ensure the approach feels fair and reasonable.
What to Do Next
If you haven’t already:
Draft or update your tipping policy so it reflects the requirements of the Act.
Train managers on how to apply the policy in practice.
Make the policy easily accessible — ideally via your HR system or staff handbook.
Speak to your team about how tips will be allocated, listen to feedback, and adjust if needed.
Supporting Your Business
The introduction of this Act is a reminder that transparency and fairness are central to building trust with employees. Taking steps now will help you stay compliant while also strengthening staff morale.
Need Any Help?
Kirby HR Consultancy can provide the advice and tools you need to do it safely, legally, and effectively.
📞 07889 053608✉️ [Insert email link]🔗 [Insert contact form link]
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