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United States
Puerto Rico

Europe

Denmark
Germany
Ireland
Norway
Poland
Sweden
United Kingdom
Spain

The law around tipping in England, Scotland and Wales is changing.

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.

Technology can help you get prepared

 

As employers, from October 2024, you’re responsible for making sure every penny that’s classed as a tip or service charge is passed to the workers. 100 per cent.

“Pretty much every point-of-sale device can take tips while someone’s paying the bill, but not all are ‘switched on’ to do it,” says Patrick Doyle, our Head of Point of Sale

“Getting them ready isn’t a big deal but we suggest getting it underway sooner rather than later so you’re ready in good time for the law and processes it brings with it.”

If your devices are from Elavon, contact us and we’ll help you.

If your payment devices are from a third party, then you’ll need to contact them.

Among elements the Act lays out, tribunals will be able to compel employers to revise your tip allocation policies, order you – the employer - to pay tips and service charges to the claimant and to any workers employed by you, and award up to £5,000 per claimant to reflect additional financial losses caused by non-payment.

And if you get a reputation for not handing on tips, that could damage morale, see you lose staff, and struggle to attract new workers.

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