New law prevents employers from withholding tips in the UK

A new law is set to come into force that will protect the tips of more than 2 million UK workers, as the Employment (Allocation of Tips) Act 2023 received Royal Assent on Tuesday.

The legislation bans employers from withholding tips, ensuring staff in the hospitality, leisure, and service sectors receive their well-earned gratuities estimated £200 million expected to be restored to workers annually, the Tipping Bill aims to ease cost of living pressures for millions across the country.

The new measures are scheduled to come into force in 2024, following a consultation and secondary legislation.

Many hospitality workers rely on tips to supplement their income and have often been left powerless when businesses fail to pass on service charges from customers.

The Employment (Allocation of Tips) Act 2023 makes it unlawful for businesses to hold back service charges from their employees, ensuring a fair distribution of tips among staff.

Business and Trade Minister Kevin Hollinrake praised the new law, stating, “As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees.”

He also thanked Dean Russell MP, Virginia Crosbie MP, and other campaigners for their efforts in making the Tipping Bill a reality.

The Act paves the way for a new statutory Code of Practice, which will provide businesses and staff with guidance on how tips should be distributed.

Additionally, workers will gain the right to request information about their employer’s tipping record, allowing them to bring credible claims to an employment tribunal if necessary.

UK Hospitality Chief Executive, Kate Nicholls, expressed support for the legislation, saying, “We’re pleased to support this new piece of legislation as it comes into law today and look forward to working with Government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality.”

The Tipping Bill is part of a broader range of government actions aimed at supporting people with the cost of living, including a recent 9.7 percent increase in the National Living Wage and extending the Energy Price Guarantee and fuel duty freeze.

These measures demonstrate the government’s commitment to helping those on lower incomes and working towards its priority of halving inflation.