Tipping: New rules are now in place for employers

Earlier this year, the UK Government announced legislation that governs the allocation of tips, which came into effect on 1 October 2024.

Under the new legislation, employers need to distribute qualifying tips to workers and will be banned from making deductions from these (other than deductions required by law). More details on the fundamentals of the new legislation can be found in a helpful article here. As a reminder, employers should have a clear and objective set of factors to determine how tips are distributed – these could include:

• Type of role/work (e.g., distribution between front of house and other workers)
• Basic pay (and how workers are engaged)
• Hours worked during period when tips are received
• Individual and/or team performance
• Seniority/level of responsibility
• Length of time served with the employer
• Customer intention

Failure to distribute qualifying tips to workers will be considered an unlawful deduction of wages and could result in litigation in the Employment Tribunal.

Further guidance is available under the new statutory Code of Practice and non-statutory guidance published by the Government.