Tipping Act Code of Practice
Under the Tipping Act, the government must introduce a new code of practice to help ensure that employers are distributing tips fairly and transparently. The government is inviting feedback to ensure this code is as helpful as possible.
The draft code of practice, which has been subject to consultation, can be found on GOV.UK.
The new code of practice is intended to help employers implement the provisions of the Tipping Act, which requires employers to do things like:
- pass on all tips and service charges to workers without deductions, except in very limited scenarios, such as deduction of income tax
- ensure that tips are distributed in a fair and transparent manner when the employer takes control, or exerts significant influence, over their distribution
- have regard to this code of practice on fairness and transparency of tip distribution when they are distributing or influencing the distribution of tips
- maintain a written policy on how tips are dealt with at their place of business, and ensure this policy is made available to all their workers
- maintain a record of all tips paid at their place of business and their allocation and distribution between each worker, to which workers have the right to request access
The new law means some employers will pay service charges over to workers for the first time (as opposed to keeping them) and/or that employers will adopt different practices, such as removing service charges so that they do not have to handle tips.
It is therefore likely that more workers will start to receive tips and/or receive them in a larger amount – and potentially in different ways.
As tips are taxable, in our submission, we tell the government that we think the code of practice should include guidance, or at least signposts to guidance, around tax.