The Employment (Allocation of Tips) Act 2023: Are you ready?

The Employment (Allocation of Tips) Act 2023 becomes law on 1st October 2024.

The legislation means that businesses must distribute all qualifying tips to workers without deductions.

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Is your business ready for the changes?

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What is changing?

Deductions

• Currently: Employers can deduct any amount from the tip’s pot to cover admin fees or other costs.
• New rules: 100% of tips and service charge must be allocated to staff members.

When are tips paid

• Currently: Some employers use the tips received in busy periods to supplement tips in quieter periods.
• New rules: Tips must be paid in full to employees no later than the end of the next calendar month after they are received.

Fair allocation

• Currently: There is a lack of guidance for operators on how to allocate tips.
• New rules: Tips must be proven to be allocated amongst staff “fairly”, and a new Code of Practice will be written by Government and will be launched to provide practical guidance on how this can be managed.

Reports

• New rules: Records of tips’ allocations must be retained for 3 years, and employees may request their personal tips statement as well as the tips statement for a business, as long as there is no other personal data of other employees included. Employers will be have to publish a clear policy relating to tips and how they are allocated.

Regular wages

• New rules: It will no longer be legal to alter an employee’s regular wage (hourly rate or salary) in return for a share of tips. It will also be illegal for any guaranteed tips’ value to contribute to the National Minimum Wage laws

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Breaking the rules?

Businesses who don’t stick to  the rules may find they are brought to an employment tribunals and face prosecution.

Under the new rules, tribunals will be able to award workers up to £5,000 to compensate them for any financial losses suffered because of their employers’ failure to pay them correctly (or at all).

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What do I need to do?

Under the new rules, businesses must as a minimum:

• Allocate qualifying tips to workers in a fair and transparent manner;
• Pay 100 percent of tips to workers by the end of the month after the month in which they were received;
• Have a written policy on allocating qualifying tips that is available to workers
• Maintain records of all qualifying tips distributed and make this available to workers on request.

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How can Slick help me?

We are launching SlickTips to help you stay compliant with the new legislation.

100% of the tip received will automatically be sent direct to the relevant staff members bank account.

We will automatically create a record of all tips distributed which you will be able to share with staff to comply with the legislation.

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What are the benefits of SlickTips?

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More tips: your SlickPay card reader will prompt the client at checkout with a range of tipping options (% and custom amount). Research shows tips received by staff increase by 25%!

Tax savings: tips will be sent direct to the employee and not via payroll which means employees do not pay national insurance and get more in their pocket

Increased staff satisfaction: more tips and less tax means employees receive more. When businesses are struggling to retain staff, tips could be your new super power

Less admin: tips are sent fairly, automatically and instantly to the service provider(s) who worked on the client, meaning you won’t need to worry about extra tipping admin in your payroll.

No horrid QR codes: many businesses force clients to pay for the service using their card machine and then tip via a QR code. Slick reduces checkout time by over 2 minutes as the client pays for the service AND tip with the same card transaction. Better client experience and a quicker checkout time.

No additional cost: unlike other providers, you don't pay a monthly platform fee for SlickTips. You stay compliant at no extra cost!

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To find out more about SlickTips, click HERE

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Disclaimer: This is not legal advice; it is intended to provide information of general interest about current legal issues.

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