Draft code of practice on allocation of tips

New rules on tips are expected to come into force in July 2024 requiring employers to ensure that tips are allocated in a fair and transparent manner.

The Government has issued a draft Code of Practice on distributing tips fairly with consultation on this draft Code of Practice ending on 22 February 2024. The draft Code has five sections:

• Scope
  • Which workers are covered
  • What tips, gratuities and service charges are covered
• Fairness
  • What is a fair allocation of tips? For example, there may be reasons why all workers do not receive the exact same allocation:
    • Type of role (eg front of house and back of house workers)
    • Basic pay
    • Seniority/level of responsibility
    • Individual or team performance
    • Length of service
    • Customer intention
  • Methods of allocation: for example, using an independent tronc operator
• Transparency
  • Employers should have a written policy in place
  • Employers should keep a record of how tips have been allocated
• Addressing problems
  • Employers should have fair processes in place for resolving issues and responding to queries.
• Glossary of terms

Whilst the Code of Practice is only in draft form and may change after consultation, it is a useful starting point for those employers in relevant sectors who will need to ensure that they have adequate systems in place by July 2024

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If you have any queries you would like to discuss regarding the draft code of practice on allocation of tips, please contact Rena Magdani or Matt McBride.

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