The Employment (Allocation of Tips) Act 2023 received Royal Assent in May 2023. When the Act substantively comes into force, it will bolster the rights of workers and employees in the hospitality sector, requiring employers to correctly pass on tips, have in place a policy on fair allocation of tips, and to keep appropriate records. The main provisions of the Act are expected to come into force some time in 2024, prior to which we can expect a Code of Practice on how to allocate tips fairly.

At the heart of the Act is a requirement for employers to allocate 'qualifying tips, gratuities and service charges' fairly between workers and to then pay these to workers. Tips received directly by the employer or which, though received by the worker, are under the employer's control, are covered. So, cash payments made directly to workers may be caught, unless the employer has a practice of not exercising control over such tips. The Act amends the Employment Rights Act 1996 and gives workers the following new rights:

• A right to receive a fair allocation of tips, gratuities or services charges. Failure by the employer can result in a compensation payment of up to £5,000 being made in respect of each worker. The time limit for bringing a claim (starting from date of non-payment or incorrect allocation) is 12 months.
• A right not to be subjected to a dismissal or detriment for asserting statutory rights in relation to tips (no qualifying period of service is required so a casual employee might bring a claim for automatically unfair dismissal).
• A right to ask the employer for records in relation to tips going back three years.
• A right to request the employer's written policy on tips. A tribunal may make a declaration of non-compliance and order the employer to comply.

The record-keeping requirements in relation to this Act will be onerous. It may be that many employers in relevant sectors will outsource their obligations to a troncmaster. Under the Act, such arrangements may be 'deemed' fair. 

Unlike the record-keeping obligations under the Working Time Directive (which the government is currently consulting on removing), these provisions are likely to be used widely by the contingent workforce. Unions seeking traction in the gig economy sector will no doubt be looking to widen their support base by highlighting the remedies available to workers under this Act.