Leisure Sector Update: The Employment (Allocation of Tips) Act: What Employers need to know

Welcome to the Harrison Drury Leisure Sector Newsletter. Your regular update on legal developments across the leisure, hospitality and tourism sector. Our aim is to keep you informed, prepared and ahead of the curve with insights tailored to support you and your business.

The Act’s aim is to ensure fairness and transparency in the distribution of tips among workers. Employers are to pass on all tips and service charges to workers without deductions.Tips are to be distributed in a fair and transparent manner where the employer has control over the tips.

An employer must have a written policy on how tips are distributed, ideally with input into that policy from workers. An employer must also maintain a record of all tips paid at their place of business.

Other questions to consider apart from the adoption of a tipping policy, and establishing a record of tips received, include whether tips should be included for the purpose of calculating the National Living Wage and holiday pay.

The call to action: Agree a tips policy in line with the Code; establish accounting records to capture information on tips received; consider if tips count towards the National Minimum and Living Wages plus holiday pay!

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