Treatment of Tips – The new rules

Treatment of Tips – The new rules

This month saw fresh legislation (The Allocation of Tips Act) stamping out the ability of employers to cheat employees out of tips or use the tips to go toward an employee’s right to the minimum wage.

In a nut shell, the new rules say:

1. Employers must establish if they are a relevant business (any business where tipping is common place), if so
2. The employer must have a written tipping policy,
3. It must be available to staff
4. 100% of tips must be paid to employees and distributed fairly; and
5. Employers must also keep a record of the treatment of tips for each employee, and that must be available for the employee to inspect.

As with any legislation, the big first question many will ask is what the penalty for failure will be.

In the event that an employee is unhappy about what has occurred with tips, they can present a claim to a tribunal. The tribunal can:

1. Order a business to revise the way in which tips are allocated; and
2. Order a business to pay the employee compensation of up to £5000

Like all new legislation it will take a short while for employers and employees to catch on to the new rights, and while this happens, many will of course ignore the new obligations. The best advice to any employer is to avoid being one of the early cases which the tribunals will inevitably make examples of, and to take a fair and sensible approach to the allocation of tips.

If you need assistance with a policy, or implementing the new rules, we are here to help.

Ellie Forsyth – Associate of CILEx in the Employment Team at Sherbornes Solicitors.