Employment Bill on hospitality tipping set to become law

An employment bill that aims to outlaw the withholding of tips and give more protection to employees is poised to become set in stone in the near future. The Employment (Allocation of Tips) Bill has recently passed the Committee reading stage, meaning it could soon become law in England, Wales and Scotland.

The bill, which would benefit more than two million people, including agency workers, will mean that all tips paid in cash or on a card will be fairly allocated to all workers with no deductions for processing fees.

As a result of this, employers will be required to keep clear records of all tips and gratuity payments for general employment law purposes and to have in place a clear and well drafted tips and gratuity policy. Employers will need to identify the best way to fairly distribute tips, which may mean working with payroll providers to ensure that tips are reflected in take-home pay. Written records of tips, including how much has been paid to employees, must be kept for three years, and employees will be able to request limited relevant information about these.

Under the potential new law, tips will be allocated to workers no later than the end of the month following the month that the tip was paid. Once the new statutory code of practice has been released, employers will have a better understanding of how to implement the new rules to ensure fairness and transparency.

The law would also mean that, if tips are unfairly allocated, or not allocated on time, employees would be able to complain to a tribunal. Employers will have to pay up to £5,000 for consequential financial losses if they have acted unlawfully.

As always, as soon as the code of practice has been issued, 121 HR Solutions will provide support to clients in its implementation. For further information on our services, contact us at enquiries@121hrsolutions.co.uk

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