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At the start of May, the new Tipping Bill achieved Royal Assent. The Act aims to overhaul unethical tipping practices so that all tips are distributed fairly amongst workers and given without deductions.

Currently, when customers provide cash tips directly to a worker, the tip generally belongs to the individual although depending on their employment terms, employers might still have some influence.

However, when tips are made through card payments, the tips are automatically received and retained by the employer. There has been growing pressure on the government to address this issue, especially with the rising cost of living and since the Covid-19 pandemic, consumers have completely shifted toward cashless transactions, 80% of all UK tipping now happens by card.

Employment (Allocation of Tips) Act 2023

The implementation of the legislation is expected to have an impact on more than 2 million workers in the UK who work in restaurants, pubs and cafes and often receive minimum wage and rely on tips.

The purpose of the new Act is to prohibit this current practice of withholding or keeping a portion of employee tips paid by card, the Bill will make it unlawful and will ensure workers receive the tips they have earned. The legislation’s main provisions are expected to come into force in 2024 following consultation and secondary legislation.

Read the full act here.

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