This article was co-authored with solicitor, Shannon Willett. 

As previously reported here, the Employment (Allocation of Tips) Act 2023 (the “Tipping Act”) came into force earlier this month, overhauling tipping practices and introducing a range of new measures for  employers to comply with. 

With the arrival of the much anticipated Employment Rights Bill (the “Bill”), further change to tipping practices is on the horizon just weeks after the Tipping Act came into force. The new Bill is making its way through Parliament and may well be amended before it becomes law but the below shows the direction of travel for affected employers who may also be required to:

• Consult with trade union or worker representatives before implementing a policy on tips for the first time. The Statutory Code of Practice that sits alongside the Tipping Act (the “statutory Code”) currently recommends that employers consult with workers to “seek broad agreement” on the fairness of the allocation of tips. It is important to note, however, that a breach of the statutory Code does not currently give rise to a standalone claim in the Employment Tribunal. If, however, the requirement to consult with representatives is introduced into the Tipping Act by virtue of the proposed changes set out in the Bill, this position may change. 
• Consult with trade union or worker representatives where the employer carries out a review of their tipping policies. Employers would also be required to review their policies at least once during the first three years of the operation of the policy and at three-year intervals after that (as well as from time to time). The statutory Code currently recommends that the approach to tipping is regularly reviewed, and that staff are consulted on any updates to the policy. However the proposals in the Bill take this a step further and would make it a statutory obligation on employers to conduct reviews at set intervals and to consult when representatives when doing so. 
• Produce a summary of the views expressed during any consultation, to be made available in an anonymised form to all of the employer's workers workers at their place of business. 

So what impact will these proposals have on employers? Well, the new proposals go further than the current Tipping Act by giving a stronger voice (in line with other proposals) to trade unions and workers, in this instance, in respect of tipping practices.  The potential impact these reforms could have on employers in the hospitality, leisure and service industry has led some within the sector, including UKHospitality, to offer a warning to the government that the proposed ‘changes are not without cost’ and that ‘ongoing consultation is needed to avoid unintended negative consequences’.

These proposals are not the only changes on the horizon, which aim to strengthen workers’ rights. Changes to the allocation of tips is just one of many reforms proposed by the government under the Bill. You can read all about the proposed measures on the way in our Employment Rights Bill special.

The government has promised that there will be public consultations so there is likely to be a long road ahead before any of these reforms take effect, with most changes not expected to come into force until 2026 at the earliest. Just exactly how these reforms will work in practice remains to be seen.

If you would like to discuss how these changes might impact your business, please do get in touch.