• Swindon & Wiltshire Experts
• Thursday May 1 2025
• Author Name: Peter Jones

Hospitality businesses need to watch new tipping laws – the HR Dept

Employers in the hospitality sector whose staff receive tips need to make sure they are complying with new legislation, says Peter Jones of the HR Dept.

The Employment (Allocation of Tips) Act 2023 has significant implications for HR policies and procedures.

Hospitality businesses must now implement processes to guarantee the full and fair allocation of all tips, gratuities, and service charges to their employees, with no deductions beyond tax and National Insurance.

Owners must now follow the new rules, or they risk an employee taking them to a tribunal, which, if they lose, could result in a fine.

Under the Act, employers must draw up a written tips policy – and their staff should be trained in and aware of the policy.

They are also obliged to distribute 100 per cent of tips and service charges directly, and fairly, to their employees. They also need to keep records.

Qualifying staff are entitled to bring a claim against a business in an Employment Tribunal if they believe the tips are not being distributed fairly, with potential penalties for non-compliance of up to £5,135 per employee.

This comes as part of a raft of Employment Tribunal Compensation increases.

Although the new rules were introduced in October last year, enforcement began in April.

Business owners also need to be aware that the legislation applies to agency workers as well as zero-hours workers, but not to those who are self-employed.

Peter Jones, managing director of the HR Dept Swindon & Wiltshire, working with businesses across Swindon, Chippenham, Hungerford, Marlborough, Calne, Devizes, Burford, Lechlade and Carterton.

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