Employment (Allocation of Tips) Act 2023
| Jurisdiction | UK Non-devolved |
| Citation | 2023 c. 13 |
| Year | 2023 |
Employment (Allocation of Tips) Act 2023
2023 Chapter 13
An Act to ensure that tips, gratuities and service charges paid by customers are allocated to workers.
[02 May 2023]
Be it enacted by the King’s most Excellent Majesty, by and with the advice and consent of the Lords Spiritual and Temporal, and Commons, in this present Parliament assembled, and by the authority of the same, as follows:—
1 Tips, gratuities and service charges
After section 27B of the Employment Rights Act 1996 insert—
“PART 2B
TIPS, GRATUITIES AND SERVICE CHARGES
Requirement to deal with tips, gratuities and service charges
27C
(1) This Part makes provision for—
(a)
(a) how employers must deal with qualifying tips, gratuities and service charges, and
(b)
(b) the Secretary of State to issue a code of practice to promote fairness and transparency in relation to the distribution of qualifying tips, gratuities and service charges.
(2) In this Part “” means—
(a)
(a) employer-received tips, and
(b)
(b) worker-received tips which—
(i) are subject to employer control, or
(ii) are connected with any other worker-received tips which are subject to employer control.
(3) An “employer-received tip” is an amount paid by a customer of an employer by way of a tip, gratuity or service charge (however described) which—
(a)
(a) is received upon its payment or subsequently by the employer or an associated person, or
(b)
(b) is received upon its payment by a person under a payment arrangement made between the employer and that person.
(4) A “worker-received tip” is an amount paid by a customer of an employer by way of a tip, gratuity or service charge (however described) which—
(a)
(a) is received upon its payment by a worker of the employer, and
(b)
(b) is not subsequently received by the employer or an associated person.
(5) For the purposes of subsection (2)(b)—
(a)
(a) a worker-received tip is subject to employer control if the employer or an associated person exercises control or significant influence over the allocation of the tip;
(b)
(b) a worker-received tip (“tip A”) is connected with another worker-received tip which is subject to employer control (“tip B”) if—
(i) both tips are paid at, or are otherwise attributable to, the same place of business, and
(ii) tip A is paid later in the week, or in the week following the week, in which tip B is paid.
(6) In this section the “” means the actual amount paid by the customer (and accordingly any deductions from the amount paid, whether deducted by the employer or any other person, are to be disregarded when determining the amount paid by the customer).
(7) An amount paid by a customer of an employer is not paid by way of a tip, gratuity or service charge to the extent that the amount represents payment of value added tax.
(8) If an amount is not paid in money, it can be a qualifying tip, gratuity or service charge only if it is paid in the form of a voucher, stamp, token or similar item which is—
(a)
(a) of a fixed value expressed in monetary terms, and
(b)
(b) capable of being exchanged (whether on its own or together with other vouchers, stamps, tokens or items, and whether immediately or only after a time) for money, goods or services (or for any combination of two or more of those things).
(9) In this section—
“” means an arrangement between an employer and another person under which payments made by customers of the employer are to be received by the other person instead of the employer;
“” means any period of seven days beginning with a Monday (and ending with a Sunday).”
2 How tips etc must be dealt with
After section 27C of the Employment Rights Act 1996 insert—
27D
“27D. How tips etc must be dealt with
(1) An employer must ensure that the total amount of the qualifying tips, gratuities and service charges paid at, or otherwise attributable to, a place of business of the employer is allocated fairly between workers of the employer at that place of business.
(2) Where a worker is allocated an amount of employer-received tips in accordance with subsection (1), that amount is payable to the worker by the employer.
(3) In determining what would be a fair allocation of qualifying tips, gratuities and service charges under this section or section 27E (non-public places of business), regard must be had to the relevant provisions of any code of practice issued under this Part.
(4) See also sections 27E (non-public places of business) and 27F (independent troncs).
27E
(1) This section applies where—
(a)
(a) qualifying tips, gratuities and service charges are paid at, or are otherwise attributable to, a non-public place of business of an employer (the “non-public tips”), and
(b)
(b) the employer also has one or more public places of business.
(2) The employer may comply with the requirement in section 27D(1) to ensure that the total amount of the non-public tips is allocated fairly between workers of the employer at the non-public place of business by instead ensuring that the total amount of the non-public tips is allocated fairly between both—
(a)
(a) workers of the employer at the non-public place of business, and
(b)
(b) workers of the employer at one or more public places of business of the employer.
(3) In this section—
“” means a place of business that is not a public place of business;
“” means a place of business where interaction between—(a) customers of the employer, and(b) workers of the employer,occurs wholly or mainly face-to-face.”
3 Independent troncs
After section 27E of the Employment Rights Act 1996 insert—
27F
“27F. Independent troncs
(1) In this section “” means the qualifying tips, gratuities and service charges that—
(a)
(a) are paid at, or are otherwise attributable to, a place of business of an employer, and
(b)
(b) are paid during a reference period.
(2) Where—
(a)
(a) the employer makes arrangements for the total amount of the relevant tips to be allocated between workers of the employer at the place of business by an independent tronc operator, and
(b)
(b) it is fair for the employer to make those arrangements,
the employer is to be treated as having ensured that the total amount of the relevant tips is allocated fairly between workers of the employer at the place of business in accordance with section 27D(1).
(3) Where—
(a)
(a) the employer makes arrangements for a part of the total amount of the relevant tips to be allocated between workers of the employer at the place of business by an independent tronc operator, and
(b)
(b) it is fair for the employer to make those arrangements,
the employer is to be treated as having ensured that that part of the total amount of the relevant tips is allocated fairly between workers of the employer at the place of business in accordance with section 27D(1).
(4) In determining whether it would be fair for an employer to make the arrangements mentioned in subsection (2) or (3), regard must be had to the relevant provisions of any code of practice issued under this Part.
(5) Section 27D(2) does not apply to an amount which—
(a)
(a) by virtue of subsection (2) or (3), is treated as having been allocated fairly between workers, and
(b)
(b) is payable to the worker by the independent tronc operator.
(6) For the purposes of this section “an independent tronc operator” is a person who the employer reasonably considers to be operating, or intending to operate, independently of the employer, arrangements under which—
(a)
(a) the total amount of qualifying tips, gratuities and service charges subject to the arrangements is allocated between workers of the employer at the relevant place of business by the person,
(b)
(b) such allocated qualifying tips, gratuities and service charges are payable to such workers by the person or by the employer (or partly by the person and partly by the employer),
(c)
(c) amounts payable to workers by the person in accordance with paragraph (b) are not subject to unauthorised deductions by the person, and
(d)
(d) all payments made to workers in accordance with paragraph (b) are payments to which paragraph 5(1) of Part 10 of Schedule 3 to the Social Security (Contributions) Regulations 2001 ( S.I. 2001/1004) (payments disregarded in the calculation of earnings)—
(i) applies by virtue of the payments meeting the condition in paragraph 5(3) of that Part, or
(ii) would apply by virtue of the payments meeting the condition in paragraph 5(3) of that Part if the modifications in subsection (7) were made to paragraph 5 of that Part.
(7) The modifications are—
(a)
(a) each reference to a “secondary contributor” is to be read as a reference to an “employer”;
(b)
(b) each reference to an “earner” is to be read as a reference to a “worker”.
(8) The Secretary of State may by regulations—
(a)
(a) amend the definition of “independent tronc operator” in this section in consequence of the making of social security contributions regulations, and
(b)
(b) consequentially amend any other provision of this Part.
(9) In this section—
“” means a period of at least one day, as determined by the employer from time to time;
“” means any regulations making provision related to social security contributions of employers or workers;
“” means a deduction that is not required or authorised to be made by virtue of a statutory provision.”
4 When tips etc must be dealt with
After section 27F of the Employment Rights Act 1996 insert—
27G
“27G. When tips etc must be dealt with
The employer must—
(a) ensure that a qualifying tip, gratuity or service charge is allocated in accordance with section 27D(1), and
(b) make any payment that the employer is required to make to a worker under section 27D(2) as a result of that allocation,
no later than the end of the month following the month in which the tip, gratuity or service charge was paid by the...
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