02 October 2024 - 3 min read
Megan Lipscombe
Head of Marketing
Making sure tips are fairly shared among staff has always been a challenge for hospitality businesses, and with the new Employment (Allocation of Tips) Act 2023 now in effect, it’s more important than ever to stay on top of this. Balancing compliance, fair distribution, and handling both cash and card tips can be a frustrating task, so how can you make sure you’re getting it right?
We know that a lot of businesses in the UK are feeling nervous about the upcoming changes, and how they’re likely to affect their operations. At Rotaready, we’re passionate about giving you the right tools to keep your business organised and compliant when it comes to managing your people. With our award-winning rota software, and collaboration with TiPJAR, managing tips across your business can be incredibly easy.
In this article, we’ll break down the new law, what it means for your business, and how Rotaready can help you stay compliant and in control.
The new regulations are set to take effect in October 2024, and they mark a significant shift in how tips have previously been managed in the UK. Under the new law all tips, whether from cash or card payments, must be given directly to the staff who provided the service. Employers will no longer have discretion over the distribution of tips, and businesses can no longer withhold tips for business purposes.
The act is designed to promote fairness and transparency, particularly in industries like hospitality where tipping is common. Employers will need to make sure they’re maintaining detailed records of how tips are distributed, and make these records accessible to employees if they ask to see them. It’s also important to note that the law applies to all workers, including those on zero-hour contracts, and requires that tips are paid out within one month of collection.
Compared to previous tipping laws in the UK, there are some key changes that you need to be aware of, including:
These changes ensure greater transparency and fairness in tipping practices, shifting more control to workers and ensuring they receive the full benefit of tips they earn.
The new tipping laws mean that your current process might need a rethink. You’ll need to implement and publish a written policy on how tips will be fairly distributed among staff, using clear and objective criteria. You also might want to consult with employees to ensure the system is transparent and meets legal requirements.
The biggest challenge for many hospitality operators will be keeping track of all of this, and making sure nothing gets missed. Manual records will be extremely difficult to maintain with any level of accuracy, particularly if you’re working across multiple sites, or have a high turnover of staff.
To stay compliant, it might be beneficial to invest in a software solution which can help track tip distribution and maintain accurate records. This preparation is essential for avoiding penalties and ensuring smooth operations when the law comes into effect.
For employees, the Allocation of Tips Act offers some key benefits. It makes sure they’ll receive the full amount of tips they earn without any being withheld by the employer. It also provides transparency, giving workers the right to access records of tip distribution and challenge any discrepancies.
Ultimately,the law offers protection against unfair practices, allowing your employees to file complaints if they feel tips haven’t been allocated fairly. This in turn means that workers in sectors where staff are reliant on tips will receive fair compensation for their hard work.
Why is it so important to stay compliant? Well, it could be pretty costly if you don’t.
Employees who believe they haven’t received their rightful share of tips can file a claim against you. If you’re found to be in violation of the act, your business could face penalties and be required to pay up to £5,000 in compensation for lost earnings. Not only does this impact your brand financially, your reputation could suffer too, leading to higher staff turnover and less custom.
To avoid these disputes, it’s really important to take steps to make sure you’re maintaining accurate records, and you’ve published a clear tipping policy.
Rotaready can help you to navigate the new tipping laws by offering software solutions that streamline the process of tracking and allocating tips, and maintaining accurate records. Our partnership with TiPJAR makes it easy for you to manage tips and in turn stay compliant with the law. To learn more, check out our tipping legislation guide.
For many UK hospitality businesses, things are going to change significantly when the laws come into effect. The Employment (Allocation of Tips) Act 2023 marks a significant change in tipping practices across the UK, bringing a new level of transparency and fairness to how tips are distributed. In this article, we’ve looked at how these changes will affect hospitality businesses, and how employees can expect to benefit from them. We’ve discussed the key steps you’ll need to take to make sure you stay compliant, and how software can help with that.
If you need to make some operational changes in your business to help you stay compliant, Rotaready can help make this transition smoother for you. Our powerful tools and integrations simplify tip allocation and record-keeping across the business. Request a demo today to see how Rotaready can assist you in managing the changes ahead.
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