A new law on tipping came into force in England, Scotland, and Wales on 1st October 2024. The law has been designed to protect staff and ensure that they are paid 100% of any tips or gratuities they receive - whether in cash or by card.

It’s thought that this new tipping policy covered in the Employment (allocation of Tips) Act 2023 will benefit more than 2 million UK workers in the hospitality/service sector.

The new law applies across all industries, but is expected to benefit those working in restaurants, cafes, bars, pubs, hotels and hairdressers or as taxi or delivery drivers the most.

Under the new law, all tips must be passed to employees by the end of the following month from when they were received. If companies break the law and retain tips, staff will be able to bring claims to an employment tribunal.

Workers will still need to pay tax on their tips, as was the law previously.

Key features of the Act include:

• This Act ensures that 100% of tips, gratuities and service charges paid by customers are allocated to the staff
• Tips must be allocated in a fair and transparent way to all staff including agency staff
• Employers of businesses must have a written Tipping Policy in place
• Tips must be distributed within one month following the month in which they were received
• Employers are not allowed to make any deductions from the tips. The staff will have these applied to their payslips and subjected to Tax & NI
• Staff have a right to request a copy of their tipping record to enable them to bring a claim to Employment Tribunal where they believe they are not receiving the tips they should be
• Employers are required to keep a record of how every tip has been dealt with for three years from the date the tip was paid.

• Under the new law, it will be illegal to withhold tips from staff.