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Let's Talk Tips

Louise Moseley

New legislation was brought in on the 1st October, which included a Code of Practice relating to the Fair and Transparent Distribution of Tips.


Employers affected by the new code are required to:


  1. pass on all qualifying tips and service charges to workers without deduction, except in very limited situations such as the deduction of income tax

  2. ensure that all qualifying tips are distributed in a fair and transparent manner, when the employer takes control, or exerts significant influence over their distribution

  3. have regard to this Code of Practice on fairness and transparency of tip distribution, when they are distributing or influencing the distribution of tips

  4. maintain a written policy on how qualifying tips, which are paid on more than an occasional and exceptional basis, are dealt with at their place of business, and ensure this policy is available to all their workers

  5. maintain a record of all qualifying tips, paid at their place of business, on more than an occasional and exceptional basis, and their allocation & distribution between each worker, to which workers have the right to request access.


So what does this mean in practice, and how will it affect your business? The following points will hopefully help:


  1. It's up to the employer to consider what would be a fair allocation and distribution of tips. If there is a mixture of staff categories, e.g. permanent, agency, part-time, zero hours; then the impact on various members of staff should also be considered.

  2. The allocation and distribution of tips fairly, does not necessarily require employers to allocate the same proportion of tips to all workers. There may be legitimate reasons why employers choose to allocate different workers, different proportions of tips.

  3. Employers should use a clear and objective set of factors to determine the allocation and distribution of tips. Those factors should be fair and reasonable, according to circumstances and the nature of the individual business. Consideration may be given to for example, the type of role, basic pay, hours worked during a period when tips are received, individual and/or team performance, seniority/level of responsibility, length of service, customer intention.

  4. Employers must avoid any form of unlawful discrimination when selecting and applying the criteria for the allocation & distribution of tips.

  5. Employers should consult with workers to seek broad agreement in the workplace, that their system is fair, reasonable and clear.

  6. The various factors used by an employer to determine a fair and clear system, must be stated in a Tipping Policy which must be shared with workers.

  7. An employer's approach to allocating and distributing tips should be reviewed on a regular basis, in line with staff turnover and any wider changes to the business.

  8. An employer will not have met their obligations if workers are not aware of their entitlements in line with the tipping policy

  9. A policy is only required if qualifying tips are paid on more than an occasional or exceptional basis.

  10. The policy must be written in plain language, and employers must provide an accessible format for any worker with a disability, on request.

  11. The policy can be provided in either an electronic or hard copy format. Where agency workers are engaged, employers can request that the agency shares the policy with workers on their behalf.

  12. Employers must keep a tipping record, if qualifying tips are paid on more than an occasional and exceptional basis. It must include details of all qualifying tips that have been received by the employer at the place of business, along with details of the amount allocated to each worker. The tipping record must be kept for a period of three years.

  13. A worker has the right to make one written request per three month period, to view the tipping record, for a period dating back up to three years.

  14. Employers should ensure they have fair processes in place for resolving issues, and for responding to queries from workers who haven't received the share of tips they were expecting to.

  15. If an employer chooses to appoint a third party to manage the tips (known as a tronc operator), the instructions given, or framework used must be display fairness. If an employer is aware of any unfairness, they must address it.


If you have any queries regarding the new legislation around the allocation and distribution of tips, please contact the team at helm: hello@helmpositiveworkplaces.co.uk


Please note that the above information has been prepared in good faith, and should in no way be considered to be legal advice.

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