The law around tipping in England, Scotland and Wales has changed.
Whether you call them tips, gratuities, or service charges, the Employment (Allocation of Tips) Act 2023 states you must pass 100% of tips to your workers, without any deductions.
All so-called ‘tipping industries’ are affected – not just restaurants, cafes, bars, and hotels but also taxis, tourist services, health and beauty, gambling and gaming… any business where tips are routine.
And the tip doesn’t have to be money. If it has monetary value, such as a stamp or a gambling chip, it’s included.
It’s estimated this will see more than £200 million reach the pockets of workers that might otherwise have been retained or deducted.
“The hospitality industry has struggled for years with staff shortages. This is a way to improve perceptions, conditions, transparency and fairness for workers – which may help attract more workers back to or into the sector,” says Dave Wheatcroft, our Head of European Hospitality.
“It also makes sure employees receive the recognition they deserve for their role in providing a great customer experience,” he adds.
It’s long been the case that tips left in cash for workers either go directly to them in full or are pooled and shared informally between teammates on a shift.
Tips paid through digital methods or as a service charge included in the bill or fare is where the biggest change will be felt. Headline-grabbing exposés in the industry claim some businesses were keeping tips completely or deducting fees (as high as 15%) before sharing them on to workers.
The Employment (Allocation of Tips) Act ends that inconsistency.
