UK – Preparing for the New Tipping Legislation: Essential Insights for Hoteliers

Understanding the Upcoming Tipping Legislation: A Guide for Hoteliers

The UK hospitality sector is preparing for significant changes with new tipping legislation set to take effect. Initially scheduled for July 2024, its implementation has been delayed until October 2024, giving hoteliers additional time to adapt.

What is the New Tipping Legislation?

Simply put, the new law mandates that hotels and hospitality businesses must pay staff 100% of tips received, without any deductions for expenses. This means that all tips must go directly to the employees.

Key Aspects for Hoteliers:

Purpose of the Tipping Act:
– Ensure fair and transparent allocation of tips.
– Improve fairness for workers.
– Create a level playing field for employers who already allocate all tips to employees.

Employer Obligations:
– Pass on all tips to workers without deductions (except for income tax).
– Distribute tips fairly and transparently.
– Maintain a written tipping policy and make it available to all workers, including agency workers.
– Keep records of all tips and their allocation for at least three years.

Scope:
– Covers employer-received and worker-received tips subject to employer control.
– Includes non-monetary tips if controlled by the employer.
– Applies to all ‘workers’, excluding self-employed individuals.

Fairness:
– Tips do not need to be distributed equally among all workers.
– Allocation should be based on clear and objective factors such as role type, basic pay, performance, and seniority.
– Avoid unlawful discrimination in tip allocation.

Methods of Allocation and Distribution:
– Tips can be distributed directly by the employer or through a tronc (a pooling system).
– Ensure tronc arrangements are fair and independent.
– Distribute tips by the end of the month following their receipt.

Transparency:
– Maintain a written tipping policy, available electronically or in physical form.
– Include accessible versions for workers with disabilities upon request.
– Detail the acceptance, allocation, and distribution of tips.
– Make tips records available to workers upon request.

Addressing Issues:
– Establish fair processes for resolving tip-related issues.
– Workers can seek recourse through Acas (Advisory, Conciliation and Arbitration Service) or employment tribunals if issues remain unresolved.

Public Sentiment and Research:

Research conducted by HOSPA and UKHospitality revealed strong public support for tipping, with 81% of respondents being regular tippers. Additionally, 82% preferred tips to go directly to the person serving them. The study also highlighted a preference for tips to be added separately rather than as a service charge.

Despite the complexities and potential challenges for operators, the new legislation aligns with public sentiment and aims to ensure fair treatment of hospitality workers.

Preparing for the Change:

Whether in favor of the legislation or not, hoteliers must prepare for its implementation. The additional time until October 2024 should be used to adapt policies, ensure transparency, and establish fair tip distribution practices to comply with the new law.