NEW RULES SERVICE CHARGE AND TIPS IN UK

NEW RULES EFFECTIVE FROM 01ST OCTOBER 2024. WHAT’S CHANGED AND HOW DOES IT EFFECT YOU? From 01st October 2024 the employment (allocation of tips) act 2023 will make it compulsory that employers are to distribute all tips to employees through fair allocation. The new legislation will ensure that all tips whether by cash or card are passed onto employees without any deductions from their employers.The new law introduces a number of changes to tipping practices in the UK, which if they are not obeyed could have financial consequences for employers with penalties of up to £5000 per employee to reflect the losses suffered.

WHAT DO YOU NEED TO DO AS AN EMPLOYER ?
Business owners will need to implement a written policy. You will need to keep records of how the tips are being explaining how qualifying tips and service charge will be
allocated and distributed between the employees. allocated and distributed in a fair and consisent manner. The written policy should be clear and made available
to all employees to show transparency and fairness with the distribution of tips. Having this in place will show your company is adhering to the new laws and will help to avoid any employees complaints or claims.Employees can request information about the companies tipping records once every 3 months and these would need to be provided to the employee. These records must show that the tips have been distributed fairly between the employees.

PAYING THE TIPS, GRATUITIES & SERVICE CHARGE
You must ensure that tips are paid to employees by the end of the following month.
If the tips are not paid correctly, then employee can claim up to £5000 in compensation.

New tips policy effective 01st October 2024.

Provide
all staff
with fair
allocation
of tips
policy.

Prepare
tipping
records
template.

Provide
Payroll As
You Go
with the
allocation
of tips.

Pay the
tips to the
employees.

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