What is the Employment (Allocation of Tips) Act 2023?
The Employment (Allocation of Tips) Act 2023 came into effect on 1st October. It aims to ensure that hospitality workers receive 100% of tips, gratuities, and service charges. The headline is that the legislation prevents employers from keeping any part of tips for their costs. This ensures fairness and transparency in how tips are shared.
Summary of Legislation
What you need to know:
- 100% of tips must be fully distributed to staff, backed with proof this has occurred.
- No deductions allowed, without exception.
- Employers need to distribute all tips to workers by the end of the month following the month it was paid by the customer.
- Agency workers are also entitled to tips, although this needs to be paid for by the agency they work for.
- Employers must keep records of tip distribution.
- Workers can bring any claims to an Employment Tribunal if their employer fails to provide the required records.
Changes to Tronc
Tronc schemes, often used for pooling and distributing tips, must now comply with stricter rules under the act. Employers cannot retain any portion for expenses, and transparent guidelines must be in place. All tips must be given to workers within a specific time. Records of the distribution need to be available for staff.
| Before the Act | After the Act |
| Employers could retain a portion of tips for costs. | 100% of tips must go to workers with no employer deductions. |
| Informal or employer-managed systems allowed. | Must be transparent, with set rules for distribution. |
| No specific guidelines on timelines for tip payments. | Tips must be distributed within a reasonable timeframe. |
| Minimal or no records required. | Employers must maintain detailed records of tip allocations. |
In addition to these changes, the act places increased emphasis on transparency and fairness in Tronc operations. Employers must provide clear written policies about how tips are shared. They should also make sure staff know their rights about tip distribution.
Workers now also have the right to request and view tip records. This adds another layer of accountability for employers. Failure to comply with these new regulations could result in legal challenges. This makes it crucial for businesses to update their Tronc procedures in alignment with the law.
How to Prepare
To remain compliant, businesses need to:
- Review and update tip allocation policies.
- Train staff on the new rules.
- Work closely with us to ensure accurate tip records and distribution practices are in place before the act’s implementation.
How We Can Help
Gravita offers specialist advice to companies in the hospitality sector. Contact Sudhir Rawal to learn more about how the new tronc rules will affect your business.
