Updated Tipping Laws and Code of Practice: What Employers Need to Know

Maria Akunna
Solicitor
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This month, the government published their response to ‘strengthening the law on tipping’. It details the new requirements to consult workers on tipping policies, as well as the statutory Code of Practice on fair and transparent distribution of tips – Make Work Pay: strengthening the law on tipping – GOV.UK.

There was a total of 74 responses via an online form and 21 email responses. The consultation stage called for meetings with stakeholders, business representatives, trade union representatives and tronc operators.

As may be expected given the frequency with which tipping features in such businesses, most of the responses came from the accommodation and hospitality sectors.

Key points for employers to note arising from the government response on tipping

Employers must:

• Promote greater transparency and fairness for employees and customers;
• Maintain rules requiring tips to be passed on in full;
• Tighten tipping laws, especially around worker consultation; and
• Avoid overly rigid rules and models that burden businesses.

When drafting a tipping policy, employers need to review their current approach to tipping

The main points from the draft Code of Practice highlight that, when drafting a tipping policy:

• Consultation should be genuine, inclusive, transparent, and proportionate;
• Employers don’t have to accept every suggestion but should aim for broad staff agreement;
• Methods of consultation can include meetings, discussions, or surveys, depending on business size;
• All employee views should be considered to ensure fair and non-discriminatory outcomes;
• Staff support may help demonstrate fairness in legal disputes; and
• Employers should document the consultation process, including feedback and decisions.

Tipping policies from hereon should now confirm employers will do the following in practice:

• Pass on 100% of tips to workers (except tax);
• Distribute tips fairly and transparently;
• Maintain a written tipping policy (review the policy wording at least every 3 years);
• Consult workers when creating or updating the policy;
• Keep tipping records (for 3 years);
• Provide access to tipping records if workers request them; and
• Follow the new statutory code when designing tipping systems.

It may be useful for employers to reference the Code of Practice and guidance within the written tipping policy, once is has been submitted to Parliament. This is expected to be implemented in October of this year.

Topics: Employment law, Government consultation, Law on Tipping, Make Work Pay, Staff tips