What Are The Main Points?
The main point of the new Code is to ensure that there is no ambiguity about what employees are entitled to and when they can expect to receive it.
It is the employer’s duty to ensure that fairness is applied across all employees and workers.
The main points the employer needs to be aware of are listed below:
- All tips and service charges earned to be paid 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 where the employer takes control or has significant control and influence, over how they are distributed.
- Refer to the Code of Practice on Fairness and Transparency of Tip Distribution when distributing or influencing the sharing of tips.
- Provide a written policy on how tips are dealt with, and ensure this policy is made available to all workers.
- Keep a record of tips paid and their allocation to each worker at the Company’s office/premises, to which workers have the right to request access.
Frequently Asked Questions
The Code of Practice also makes some other points that employers should be aware of, depending on what they already have in place.
Who does the new Tips Legislation apply to?
This Code of Practice applies to employees and workers such as full-time, part-time, casual/zero-hours, fixed-term, and agency labour-classed workers. It does not apply to the genuinely self-employed or contractors.
It does not apply to employers who receive tips, gratuities or service charges on an infrequent basis.
What is a qualifying tip?
A qualifying tip is a tip, gratuity, or service charge that the employer controls once received and influences who receives it. Non-monetary tips also qualify under this definition.
Do all workers need to receive the same percentage of tips?
An employer can adjust the percentage of tips and how they are distributed if they feel that they are merited. This may be the case if some of the situations below apply:
- Type of role/work e.g. distribution between front of house and backroom workers
- Basic pay (and how workers are engaged)
- Hours worked during period when tips are received
- Individual and/or team performance
- Seniority/level of responsibility
- Length of time served with the employer
- Customer intention
The employer must avoid any forms of direct or indirect discrimination when deciding which level of workers should receive what percentage of the tips.
What if the employer is running a TRONC scheme?
If the employer is already running a TRONC scheme, then this should be a fair and transparent way of distributing tips. The TRONC Master is responsible for ensuring that the scheme is transparent by providing workers with scheme rules and promoting fairness by applying the rules consistently.
Should one or either of these areas be found not to be working in a fair and transparent manner, then it is the employer’s responsibility to change the scheme rules or replace the TRONC Master. An employer cannot hide behind the TRONC Master.
What should I communicate to my workforce?
It is best for the employer to be open and honest about tip payments and distribution. We suggest that you hold a meeting with all workers to explain the new rules, ensure that they know where to find the Tip Policy, and explain how tips are managed and distributed.
What Should I do if a worker is unhappy with the tip policy?
Every worker has access to the employer’s grievance procedure and can follow it to raise a grievance. Any grievance raised about Tips and Tip Distribution should be treated the same as any other grievance regarding the workplace.
If you need help or advice on these new rules, please email jon@hrsmartuk.com or call 01903 754107.
You can also read more about our HR services to see how our team can assist your SME.
