Tipping Legislation UK
If you are an Employer with a business account and JustTip processes tips on behalf of your business, the following is an overview of the legal aspects of making use of the JustTip service.
The most Important piece of legislation governing tipping in the UK is The Employment (Allocation of Tips) Act 2023, which received royal assent on 2 May 2023.
This legislation came into effect on the 1st of October 2024 and makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all the tips they have earned. Businesses found in breach of legislation could be liable for up to £5,000 worth of liability.
Where do tips go?
All tips must go to workers; no deductions can be made by operators, even to cover expenses like Card Fees and Payroll costs. All tips collected at a single venue must be returned to that venue, and some non-customer-facing staff may be entitled to tips and gratuities, for example, kitchen staff.
When do tips have to be paid?
All tips have to be paid out in the next working month after being received from a customer.
Will agency workers be included in the new legislation?
Yes, agency workers will now be included in the new legislation to receive fair and transparent tip allocations.
What sort of records do I need to keep?
All businesses will need a full written policy on how tips are collected and split between staff. This policy must also outline how it meets the new legislation. A full record of what has been collected and paid out and to whom must be kept for a minimum of three years afterwards.
Who is the legislation enforced by?
The legislation is enforceable by the Employment Tribunal, which can order compensation of up to £5,000 per employee. All complaints need to be made within 12 months.