Consultation document: code of practice on fair and transparent distribution of tips (HTML version)
Updated 22 April 2024
Applies to England, Scotland and Wales
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This publication is available at https://www.gov.uk/government/consultations/distributing-tips-fairly-draft-statutory-code-of-practice/consultation-document-code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version
This consultation is on the draft statutory Code of Practice supporting measures in the Employment (Allocation of Tips) Act 2023.
Foreword
Supporting tipping industries
Like many, I was disappointed to read media stories a few years ago of restaurant bosses pocketing tips intended for hard-working staff. In order to learn more about the scale of this problem, the government ran a Call for Evidence and followed this with a consultation on legislative measures to tackle the problem. In the government’s response to the consultation, we confirmed 3 principles for tips: that it should be clear to consumers that they are voluntary, that they should be received by workers, and that it should be clear and transparent to consumers and workers how the payments are treated.
It is clear that many employers do the right thing and pass tips on to their staff in full, but bad behaviour persists in a small number of businesses. This is bad for workers, who have not been protected from having their well-deserved tips pocketed by their employers. This is bad for customers, who want to be assured that when they recognise good service, their tip goes to the intended party. And it is bad for businesses, who should be confident that other businesses do not have an unfair competitive advantage by pocketing tips.
The government supported the passage of a private members’ bill which became the Employment (Allocation of Tips) Act 2023 (the Tipping Act) to bring forward measures to ensure tips are distributed fairly and that it is transparent to workers how tips in a workplace are treated. The Act requires that tips be passed on to workers in full, with very limited exceptions; that businesses have a tipping policy and provide this to their workers; that businesses keep records on distribution of tips; and gives workers a new right to request a copy of their tipping record, enabling them to bring a claim to Employment Tribunal in order to enforce their rights.
Today we are publishing a draft statutory Code of Practice, an important step in implementing the measures in the Tipping Act. We want this Code to be useful for workers and employers in tipping industries. Its intention is to provide statutory guidance on how employers can meet the requirements of ‘fair and transparent’ distribution of tips under the Act. I would welcome employers, workers, representatives, and consumers from all tipping industries to respond to this consultation.
This legislation is part of our wider commitments to protect workers’ rights and to ensure the UK is the best place in the world to grow a business.
Kevin Hollinrake
Minister for Enterprise, Markets and Small Business
Why we are consulting
The Employment (Allocation of Tips) Act 2023
The government is consulting to gather views on the draft statutory Code of Practice on the distribution and allocation of tips (“the Code”), in line with the statutory requirement under section 27P of the Employment Rights Act, as inserted by the Employment (Allocation of Tips) Act 2023 (“the Act”) to publish a draft of the Code, and consider any representations made in response. In accordance with section 27Q of the Employment Rights Act 1996, as inserted by the Act, the government has consulted the Advisory, Conciliation and Arbitration Service (Acas) prior to preparing and publishing the draft Code.
The Code will give employers and workers in hospitality and other tipping sectors more detail on ‘fair and transparent’ allocation of tips. It will include guidance on how tips can be gathered and distributed, factors which should be considered when distributing tips, and details on transparency measures including the requirement to keep a written tipping policy and to maintain accurate tipping records. Once the Code and other measures in the Act are in place. consumers can also have greater confidence when leaving tips to recognise good service.
This Code only provides guidance on fair and transparent allocation and distribution of tips. Its purpose is not to provide guidance on other aspects of the Act, including what workplaces or tips are qualifying under the Act, or on enforcement.
This is an opportunity for all interested parties and groups to review the draft Code and provide their views on it. The consultation will remain open for 10 weeks. We will analyse all submissions, and take the views provided into account before publishing a government response and final version of the Code in spring 2024, ahead of the aim for the Code and full measures of the Act coming into force on 1 July 2024.
Consultation details
Issued: 15 December 2023
Respond by: 22 February 2024
Enquiries to: nationalminimumwage@businessandtrade.gov.uk
Consultation reference
Consultation on draft statutory Code of Practice on Fair and Transparent Distribution of Tips.
Audiences
Audience includes:
- micro businesses, small- and medium sized enterprises (SMEs) and large businesses in tipping industries
- trade bodies
- trade unions
- legal representatives
- employment lawyers
- payroll and accountancy professionals
- troncmasters
- individual workers
- customers
- general public
Territorial extent
Employment law is reserved for England, Wales and Scotland. It is a devolved matter in Northern Ireland.
How to respond
Respond to the tipping consultation online or email your views to nationalminimumwage@businessandtrade.gov.uk
When responding, please state whether you are responding as an individual or representing the views of an organisation.
Your response will be most useful if it is framed in direct response to the questions posed, though further comments and evidence are also welcome.
Confidentiality and data protection
Information you provide in response to this consultation, including personal information, may be disclosed in accordance with UK legislation (the Freedom of Information Act 2000, the Data Protection Act 2018, and the Environmental Information Regulations 2004).
If you want the information that you provide to be treated as confidential, please tell us, but be aware that we cannot guarantee confidentiality in all circumstances. An automatic confidentiality disclaimer generated by your IT system will not be regarded by us as a confidentiality request.
We will process your personal data in accordance with all applicable data protection laws.
We will summarise all responses and publish this summary on GOV.UK. The summary will include a list of names or organisations that responded, but not people’s personal names, addresses or other contact details.
Quality assurance
This consultation has been carried out in accordance with the government’s consultation principles.
Consultation questions
About you
The following questions are about what kind of business or workplace you are responding on behalf of.
1. Are you responding as a (tick all that apply):
Business representative organisation
Business owner or employer in a tipping industry
Trade Union or staff representative group
Worker in a tipping industry
Consumer
Other (please describe)
2. If you are responding as an employer, business owner, or business representative, what type of business do you own or operate?
Hospitality (bar/pub/restaurant)
Hospitality (accommodation)
Hair and beauty
Taxis and transport
Gambling
Other (please describe)
3. If you are responding as an employer, business owner, or business representative, approximately, what is the size of your business?
Micro (fewer than 10 staff)
Small (11 to 50 staff)
Medium (51 to 250 staff)
Large (250+ staff)
Unsure
4. If you are responding as a worker, what type of workplace are you employed in?
Hospitality (bar or pub or restaurant)
Hospitality (accommodation)
Hair and beauty
Taxis and transport
Gambling
Other (please describe)
5. If you are responding as a worker, what size of workplace are you employed in?
Micro (fewer than 10 staff)
Small (11 to 50 staff)
Medium (51 to 250 staff)
Large (250+ staff)
Unsure
Distribution of tips
The following questions are about how tips in your workplace are distributed.
6. How do you/does your workplace currently accept tips from customers? Tick all that apply
Card as part of bill payment
Card separately from bill payment
Through an app
Cash (in a tip jar)
Cash (on table or handed to staff)
Casino chips
Don’t know
Other (please describe)
7. Does your workplace automatically add a tip to a customer’s bill (this may be listed a as a ‘service charge’)?
Yes
No
Don’t know
Other (please describe)
8. How do you/does your workplace currently distribute tips?
No employer influence
Employer pays out all tips from bills to the relevant staff member; and tips are not pooled
Worker-operated tronc (tips are pooled, and distributed by a member of staff)
Employer-operated tronc (tips are pooled, and distributed by employer, owner, or boss)
Third party-operated tronc (tips are pooled, and distributed by separate pay or accounting firm)
Don’t know
Other (please describe)
9. Employers: How quickly after a tip is left do you currently pay it to your workers?
Same day or next day
Same week
Same fortnight
Same month or 30-day period
Following month
Other (please describe)
Don’t know
I don’t currently pass on tips
10. Worker: How quickly after a tip is left do you currently have it passed on to you?
Same day or next day
Same week
Same fortnight
Same month or 30-day period
Following month
Other (please describe)
Don’t know
I don’t currently receive tips
11. If you are responding as or on behalf of an employer, do you pay tips out through payroll or separately from pay?
Through payroll
Separately from pay
Don’t know
Other (please describe)
12. If you are responding as or on behalf of a worker, do you currently receive tips through your pay or separately from pay?
Through payroll
Separately from pay
Don’t know
Other (please describe)
13. If you are a customer, how do you usually tip? Tick all that apply. (Note that if you are responding as or on behalf of an employer or worker in tipping industries, you can also answer these questions if you are a customer.)
Cash
Card
Chip or token
Other (please describe)
Don’t usually tip
14. If you leave a tip, who do you expect it to go to?
To the person who served me
Split between staff
The business
Unsure
Other (Please describe)
15. If you are a customer, would you like to know how tips are distributed?
Yes
No
Not sure
Allocation of tips
The following questions are about how tips are divided or allocated between staff in your workplace.
Employers
16. Have you ever sought agreement from or consulted your staff on how tips will be divided up?
Yes
No
Don’t know
17. If yes, how have you sought agreement or consulted with staff?
[Free text]
18. What factors do you consider when determining the allocation of tips in your business? Please tick all that apply.
Type of role or work
Basic pay or how workers are engaged
Individual and/or team performance
Seniority/level of responsibility
Length of service with the business
Customer intention
Don’t know
Other (please describe in question 19)
19. Please describe how you determine allocation of tips further.
[Free text]
20. If you use agency workers as well as directly employed staff, do you divide tips differently between the 2 groups?
No, this is not a factor
Yes, agency workers receive no share of tips
Yes, agency workers receive smaller share of tips
Yes, agency workers receive larger share of tips
Don’t know
Other (please describe)
Workers
21. Has your employer ever sought agreement from or consulted staff on how tips will be divided up?
Yes
No
Don’t know
22. If yes, how have you sought agreement or consulted with staff?
[Free text]
23. What factors are considered in your workplace when determining the allocation of tips? Please tick all that apply
Type of role or work
Basic pay or how workers are engaged
Individual and / or team performance
Seniority or level of responsibility
Length of service with the business
Customer intention
Don’t know
Other (please describe in question 24)
24. Please describe further how allocation of tips is determined in your workplace.
[Free text]
26. If agency workers are used in your workplace as well as directly employed staff, are tips divided up differently between the 2 groups?
No, this is not a factor
Yes, agency workers receive no share of tips
Yes, agency workers receive smaller share of tips
Yes, agency workers receive larger share of tips
Don’t know
Other (please describe)
Transparency
The following questions are about transparency of tipping practices and policies in your workplace.
27. Are you aware of there being a tipping policy in your workplace?
Yes
No
Don’t know
28. Does your workplace make the tipping policy available to staff?
Yes
No
Don’t know
I am not aware of the workplace having a tipping policy
29. Does your workplace make the tipping policy available to customers?
Yes
Yes, only on menus
No
Don’t know
Other (please describe)
30. Does your workplace currently pass on all tips to staff?
Yes
Yes, minus an admin charge
Yes, after some other deductions are made
No
Don’t know
Other (please describe)
Implementation
The following questions are about how changes following the Tipping Act will be made in your workplace.
31. Which part of the Employment (Allocation of Tips) Act 2023 do you think will take the most time to implement in your workplace? Please tick all that apply.
Measures on distribution (how and when tips are collected and passed to workers)
Measures on allocation (how tips are divided between workers)
Measures on transparency or record keeping
Not sure
Other (please describe)
32. If you are an employer, how will ensure that your workers are aware of this new policy on tipping?
[Free text]
33. If you are a worker, please describe if you feel confident asking about how tips are distributed in your place of employment.
[Free text]
34. Would you like to see further guidance provided on any of the below. Please tick all that apply.
Tipping policy guidance or template
Tipping record guidance or template
Template for requesting tipping record
Guidance on different branches of a business
Guidance on tips and agency workers
Other (Please describe)