On 1 October UK tipping law will change, with new rules set to come into force to ensure that staff in all areas of a business receive a fair allocation of tips. If your firm takes tips, you need to make sure that it complies with all the new rules. Read on to find out more.
Why is the law changing?
In recent years it’s become clear that many employers in the hospitality sector have been making deductions from staff tips or even keeping the whole service charge payment for themselves.
An aggravating factor is that research carried out in 2021 indicated that 80% of all tipping takes place by card rather than with cash (and that figure’s likely to be even higher now). That means the money doesn’t go straight to the employee – it goes to the business owner, and it’s at their discretion whether they choose to distribute it.
With workers feeling the pinch from the effects of the pandemic and the cost-of-living crisis, the government faced pressure to respond, and it has. The new rules we set out below are expected to benefit more than 2 million workers across the UK’s hospitality, leisure and services sectors.
What do I need to do?
Under the new rules, you’ll need to make sure your company:
• shares out tips to staff in a fair and transparent manner
• pays tips within a month of the end of the month in which they were received, and only makes authorised deductions (such as Pay As You Earn)
• has a written policy on how it allocates tips and makes it available to your staff
• keeps records of all the tips you pay your staff and makes this information available to them if they ask for it.
In short, from 1 October it will be illegal for your company to retain tips.
The government has also issued a Code of Practice that provides guidance for employers on how to allocate tips fairly and the steps required to comply with the new legislation.
If you require further assistance with understanding the new rules or need assistance with drafting and developing a new tips policy, Natwest Mentor can help. NatWest Mentor provides employers with help and advice on HR, employment law, and health and safety.
Get in touch with Natwest Mentor* to find out more.
*Please note, Mentor’s services incur a cost.
How Tyl can help
Our Clover card machine* is a great way to keep on top of tips. It enables you to turn tips on and off as required, and it’s really easy for your customers to use as you can provide them with four preset percentages to tip at. Another big benefit is that the Clover portal provides you with full reporting of everything tip-related in your business.
*Additional fees may apply for data usage or app downloads. Early cancellation fees may apply, eligibility criteria and fees apply.
Find out more
If you’d like to find out about how Tyl’s products can help you take tips, just get in touch with us. But as we said above, if you need to know more about the upcoming rule changes we’d recommend that you look at the government website for the most up-to-date information.