Preparing for the New UK Tipping Law – What Hospitality Businesses Need to Know

On 1 October 2024, the Employment (Allocation of Tips) Act 2023 will come into force, introducing new obligations for hospitality businesses regarding how tips and gratuities are handled. The aim of the law is to ensure that workers receive 100% of the tips they earn, promoting fairness and transparency across the industry. Below, we outline what business owners need to know, the key actions required, and how Seamless can support this transition by simplifying tip management.

Key Points of the New Law

1. Fair Distribution of Tips: Under the new Act, all tips, whether cash or card, must be distributed fairly among staff. Businesses cannot withhold or make deductions (other than for tax purposes). This applies to both direct employees and agency workers.

2. Timely Allocation: Tips must be distributed to workers by the end of the following month after they are received. For example, tips received in September must be distributed by the end of October.

3. Tipping Policy: Employers are required to introduce a formal tipping policy that clearly outlines how tips will be allocated. This policy must be accessible to all workers, ensuring transparency.

4. Record-Keeping: Businesses will need to maintain records of tips received and how they are allocated for at least three years. Workers have the right to request access to these records.

5. Independent Tronc Operator: Employers may choose to appoint an independent tronc operator to manage the distribution of tips. A properly managed tronc can offer National Insurance savings for both employers and employees, but it must remain independent from the business to comply with the law.

What Business Owners Need to Do

1. Review Existing Systems: Ensure your current tipping arrangements, such as a tronc system, comply with the new Act. Make sure no unauthorised deductions are being made from tips.

2. Update Payroll and Administration: Ensure tips are processed through payroll systems in line with tax obligations, and that all workers, including agency staff, receive their due share of tips.

3. Create or Update Tipping Policies: Introduce a clear and accessible tipping policy that explains how tips are allocated. This should be communicated to all staff to avoid any disputes or misunderstandings.

4. Keep Accurate Records: Ensure you have robust systems in place to track the collection and allocation of tips. This will be crucial in case of any disputes or potential audits.

How Seamless Can Help

Seamless offers an integrated POS system designed specifically for the hospitality industry, making it easy to track and distribute tips efficiently. Here’s how:

- Automated Tip Tracking: Seamless records tips directly through the system, categorising them by staff member and payment method. This ensures accurate tracking and compliance with the new law.

- Detailed Reporting: The system generates detailed reports showing how much each worker has received in tips. These reports can be easily be exported and provided to staff, promoting transparency and simplifying compliance with the new record-keeping requirements.

By preparing early and implementing a robust tip management system, businesses can ensure they are compliant with the new law while improving staff morale and operational efficiency.

For more information on how Seamless can support your business, visit seamlesspos.co.uk