New ACAS Guidance on the Employment (Allocation of Tips) Act 2023
The Advisory, Conciliation and Arbitration Service (ACAS) has issued new guidance on the Employment (Allocation of Tips) Act 2023, also known as the Tipping Act 2023, and its accompanying Code of Practice. This law regulates how employers must handle tips, service charges, and gratuities over which they have control or significant influence.
Key points include:
Employers are legally required to distribute tips fairly, without deductions (apart from taxes and National Insurance), and must have a written policy on tips and keeping records.
The guidance outlines what constitutes a tip (monetary or valuable exchangeable items). If an employer collects cash tips and shares them between employees, the Tipping Act and Code apply. If employees can keep cash tips and the employer has no control over them, the law and Code do not apply.
Tips must be paid by the end of the month following the month they are received.
The guidance covers tronc systems, which are used to pool and share tips among employees, detailing employers’ responsibilities to ensure fairness in tronc management. The person who runs a tronc is called a ‘troncmaster’. This can be an employee, an accountant, or an independent company.
If tips are not paid correctly, employees are encouraged to first address the issue informally, but they may raise formal grievances or file claims with employment tribunals if necessary.
The Act does not allow employers to use tips to meet minimum wage requirements, and violations could result in legal claims.
If you have any questions about this new guidance or would like us to draft or update your tipping policy, do not hesitate to get in touch.
Read the Employment (Allocation of Tips) Act 2023 here: https://www.legislation.gov.uk/ukpga/2023/13
The Code of Practice, available on GOV.UK, sets the minimum standards for distributing tips transparently and fairly: https://www.gov.uk/government/publications/distributing-tips-fairly-statutory-code-of-practice/code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version
Read the ACAS guidance here: https://www.acas.org.uk/tips-and-service-charges
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