Last year, the Conservatives pledged to create new rules to ensure businesses don’t unfairly withhold tips from workers. Now, with the new Labour government, these rules will start on October 1st, 2024. From this date, all employers must handle "qualifying tips" fairly and openly.
Whether you operate a café, restaurant, or any service-based business, understanding this law is essential for compliance and creating a supportive work environment. Here’s what you need to know to understand how this might affect your business.
What Has Changed?
The new law ensures that tips, gratuities, and service charges are distributed fairly among employees. Previously, businesses had some freedom over how tips were allocated, which sometimes led to unfair practices. Now, the law requires businesses to be transparent about their tipping policies and ensure that all staff get their fair share.
Who Does It Apply To?
This law applies to all employers in the hospitality and service sectors. If your business receives “qualifying” tips or service charges, you’ll need to familiarise yourself with the new guidelines. This includes restaurants, bars, hotels, and any service-oriented business where tips are customary.
Your Responsibilities as an Employer
As an employer, it’s your responsibility to clearly explain your tipping policy to your employees. This means you should let them know how tips will be shared—whether they will be pooled together or given directly to individuals. You should also explain any deductions, like fees from card payments, and how those will be handled. It’s important to write down your policies and talk about them regularly or create a feedback mechanism with your team to prevent any misunderstandings. This way, everyone is aware of these new changes, what to expect, and feels treated fairly.
Fair Workplace
Following fair tipping practices is not just about following the law; it can also make your employees happier and more likely to stay with your business. When staff feel valued and fairly paid, they tend to have better morale, which can lead to a more positive experience for customers. You might want to hold staff meetings to talk about the new tipping policy, giving employees a chance to share their thoughts and concerns. This open communication can help everyone feel more connected and engaged.
Seek Professional Guidance
Dealing with new laws can be tough, especially if you don’t know much about employment rules. It can be helpful to talk to an HR professional or legal expert who can make sure your business follows the law and help you create a clear tipping policy that works for your business and your team. Investing in this support can save you time and avoid any potential problems later down the road.
If you want expert advice on employment law changes such as this, and policies tailored to your business to help you remain compliant don’t hesitate to contact us at +44 (0)1233 627 275 or hello@dakotablueconsulting.com.