Tipping Legislation - December 2023
- timcundy
- Mar 30
- 4 min read
UPDATE FINALLY RECEIVED On Friday evening the government released The Code of Practice which supports the Employment (Allocation of Tips) Act - or the Tipping Act as it is now known. The most interesting thing about the release is the confirmation that the Tipping Act will come into force on 1 July 2024. Other than that, it doesn’t really say very much at all. This is quite surprising given this is the document which is supposed to tells us what a ‘fair allocation’ of tips means (which, lets not forget, is a cornerstone of the Tipping Act). So in this newsletter we’re breaking down what new information we have had from The Code and what this means for how you distribute your tips. IT’S A DRAFT Before we begin, it’s worth remembering that this is just a draft code which is out for consultation. So as it’s a draft, it will change, although I wouldn't expect fundamental changes. You can review and respond to the consultation using the link below. We will also be responding to the consultation ourselves, so if you want clarification on any points, feel free to chat through with us WHAT IS FAIR? The code sets out a number of points around fair allocation. The first thing to notice is that the legislation accepts that different companies may have different ways of allocating tips. The next point set out is that allocating fairly does not mean allocating the same amount to each employee. When it comes to how you actually divvy up the tips - The Code does not set out clearly how allocations should be made. However, it suggests that you can allocate on different areas such as job role, seniority, performance and length of employment. It doesn't give a definitive list of criteria for splitting tips; any reasonable criteria can be used. So what’s the takeaway? For us, these points very clearly show that the code will not be prescriptive in how it is applied, meaning that you should be able to tailor allocations in a way that best suits your business. CONSULTING WORKERS The code states that workers should be consulted when designing a tip allocation system. It doesn't give details on how a consultation should take place. However, it does note that if you are large enough to be consulting with unions, you should follow those standard consultation procedures. We're not sure how this consultation element will be satisfied by the majority of companies, however, we expect a combination of employee boards when designing the systems and employee questionnaires for gaining agreement. Employees picking a system does not always land up with the fairest result - this has been brilliantly demonstrated by Miller & Carter where employees picked systems that actually landed up with some servers paying to work certain shifts. You need to carefully consider what you are proposing to your employees - you have all the information and if a bad system is chosen the company may be liable. HOW DO I KNOW THAT I HAVE A FAIR SYSTEM?In reality, you do not know your system would be considered fair until it is tested at tribunal. If it does come to tribunal and you have not followed every aspect of The Code, this does not mean that you automatically have an unfair allocation system. The more parts of The Code you follow, the more likely it is that your allocation system is fair (although, in theory, it could still be classed as unfair even if you have followed almost all of The Code). Documenting the decision making process behind your allocation system will be key in defending your system at a tribunal. Showing a ‘clear and objective set of factors’ in the design of your system which are ‘fair and reasonable’ is very important. These factors should be communicated to employees and included in the policy document you will need to provide workers. WRITTEN POLICY There is a tiny bit more information on your written tips policy - written policies should include
ADDRESSING PROBLEMS Employers should have an internal system available for employees to question and challenge the allocation of tips. If the internal routes do not sort out the dispute, the employee must go to ACAS first and if that fails to bring a resolution, the employee can then go to employment tribunal. Given that there are so many opportunities to rectify any mistakes made, you should only find yourself in a tribunal if there is a fundamental disagreement about how you are allocating tips. AND THAT’S IT That is all that is new. And much of this isn’t actually new - it was contained in the original legislation. The Code of Practice is a little over 4,000 words long. Only around 500 words are actually new information - the rest is just plain language explanations of the legislation. If you have forgotten what the new legislation covers, click the link below to download our quick summary guide https://www.montyaccounting.co.uk/downloads Remember, this is all summary information and not tailored to your business. We have been working with clients over the last few months on pay banding / tronc exercises to prepare for the change in legislation. If you would like to discuss your situation, please get in touch. |
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