New Code of Practice to protect workers’ tips

A Code of Practice to ensure fair distribution of tips is set to go before Parliament, with new rules expected to be in place by October 2024.

The updated Code of Practice will have legal effect under then Employment (Allocation of Tips) Act 2023, and will make it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned. The Code will be statutory and can be introduced as evidence in employment tribunals.

Changes to how businesses can distribute tips is expected to benefit around 2 million hospitality and service sector workers with an estimated £200 million annually.

Business and Trade Minister Kevin Hollinrake said:

“It is not right for employers to withhold tips from their hard-working employees.

“Whether you are cutting hair or pulling a pint, this government’s legislation which will protect the tips of workers and give consumers confidence that when they leave a tip, it goes to the hardworking members of staff.

“The secondary legislation laid today reinforces our commitment to legally protecting our low paid workers and ensuring a fair day’s pay for a fair day’s work.“

CEO of cashless tipping platform, Tipjar, Ben Thomas said:

“Hospitality and service industries are part of the fabric of our culture and a cornerstone of our economy.

“We are honoured to have consulted with the Department of Business and Trade as they have developed this important Code of Practice clarifying employers’ responsibilities as they pass tips to their hard-working teams.

“As a business that exists to help employers distribute tips on the same principles of fairness and transparency, we are confident that this Act will support millions of tipped workers across the UK, and level the playing field for businesses across these sectors. We’re excited to support employers in leveraging the opportunities this will present, as we build a more fair and transparent future.“