Sat 16th Dec 2023 - Government publishes its long-awaited tipping code of practice Government publishes its long-awaited tipping code of practice: The government has published its long-awaited code of practice on tipping, which will come into effect on 1 July 2024. The Tipping Act was granted Royal Assent on 2 May 2023. It amends the Employment Rights Act 1996 so that employers are now required to: pass on all tips and service charges to workers without deductions, except in very limited scenarios, such as deduction of income tax; ensure that tips are distributed in a fair and transparent manner when the employer takes control, or exerts significant influence, over their distribution; have regard to this code of practice on fairness and transparency of tip distribution when they are distributing or influencing the distribution of tips; maintain a written policy on how tips are dealt with at their place of business, and ensure this policy is made available to all their workers; and maintain a record of all tips paid at their place of business and their allocation and distribution between each worker, to which workers have the right to request access. The Tipping Act defines “qualifying tips, gratuities and service charges” as employer-received tips or as certain worker-received tips. These terms are explained as referring to tips that are themselves either received by the employer, subject to the employer’s control or connected to worker-received tips that are subject to employer control. Under the Tipping Act, an employer must ensure that the total amount of the qualifying tips, gratuities and service charges paid at, or otherwise attributable to, a place of business of the employer is allocated fairly between workers...at that place of business. On methods of allocation and distribution, the code said: “An employer can also choose to allocate and distribute tips fairly and transparently by using a tronc. Various tronc arrangements are permitted. An employer may directly appoint a member of staff to be responsible for allocating and distributing tips; and that member of staff can act as an independent tronc operator. An independent tronc operator may also be an external payroll or accountancy firm or alternatively a member of staff elected or agreed upon by the workers. Care is needed to maintain independence. If an employer chooses to appoint an independent tronc operator, the instructions or framework the employer sets for its operation must be in line with principles of fairness. If they do so, and they have a reasonable belief that the tronc is operating independently and fairly, the employer will be regarded as having complied with this code of practice.” It states that allocating and distributing tips fairly does not necessarily require employers to allocate the same proportion of tips to all workers. It says: “There may be legitimate reasons why employers choose to allocate different workers different proportions of tips. Employers should use a clear and objective set of factors to determine the allocation and distribution of tips. The choice of factors should be fair and reasonable given the circumstances and the nature of the individual business. Some of the factors that may be considered by employers, though this list is illustrative rather than exhaustive: Type of role/work e.g. distribution between front of house and back-room workers; basic pay (and how workers are engaged); individual and/or team performance; seniority/level of responsibility; length of time served with the employer; and customer intention.” The code applies to England, Scotland and Wales and the government said it will be reviewed periodically to ensure it remains up to date. UKHospitality chief executive Kate Nicholls said: “The code of practice has been much anticipated and it's positive that it has finally been published so that the sector can provide feedback and begin to plan. On initial reading, we're pleased that the code of practice recognises the variety of different business models within hospitality and that the code of practice is not too prescriptive, allowing tips to be based on the circumstances of a role, for example. We'll be working closely with the Department of Business and Trade to provide feedback from members and ensure the final date of implementation allows businesses ample time to digest and implement the requirement under the code of practice. More guidance on how the overall legislation will operate, alongside the code of practice, is expected soon and we will continue to analyse these updates as they come.” The full draft code of practice can be found here.