How to Prepare for the Upcoming Tip Legislation Changes
You may have heard a lot of talk about tips, service charge and tronc recently, as the UK government will soon be making some changes to the way in which these are allocated and paid to staff members.
The Employment (Allocation of Tips) Act 2023 achieved Royal Assent in May 2023 and is expected to come into force on 1st October 2024.
The main aim of the act is to ensure that all tips reach service staff, and that they are allocated to staff in a fair way. It deals with tips or service charge which are “employer-received” (ie. paid by card or otherwise to the employer and then paid to the staff member), as well as cash tips which are under the control of the employer to be allocated.
If you want all the details, you can read the full Employment (Allocation of Tips) Act 2023. For an overview and to learn about how systems like Kobas is equipped to facilitate the upcoming changes, read on.
What's changing?
- Deductions - 100% of gratuities must be passed on to staff and no deductions can be made
- Timing - Money must be paid to staff no later than the end of the month following when it was received
- Multi-Venue Operations - Staff may receive tips from multiple venues but only if their role can be shown to be covering all those sites
- Fair Allocation - The process for distribution must be shown to be fair across all staff
- Regular Wages - Staff’s regular hourly rate or salary can no longer be adjusted in return for gratuities
- Agency Workers - Agency workers are entitled to the same gratuities as employees in the same role, and money must be passed to agencies under the same timing rules above (agencies have an additional month to pass on money to the staff themselves)
- Documentation - Records must be kept on how gratuities were distributed and how much was paid for three years
- Company Policy - A policy must be available for all staff which explains how tips are received and allocated, distribution methods, how records are kept and how disputes will be resolved.
How Kobas helps
During the Government Consultation process, 53% of companies surveyed said that record keeping and policy would be the hardest part of the new legislation to implement.
Whether your business currently uses Kobas or another system to handle gratuities, it's essential to ensure you're aligned with the tip regulation updates arriving in Autumn 2024. This is especially important for hospitality businesses. Here are some ways to prepare with the Kobas system specifically.
The Kobas Tips Per Employee By Date report in our system includes all the information an operator needs – no extra record-keeping required! Simply make sure that every staff member has an updated Tronc Weighting in the Pay & Bank Details on their Staff Profile (and make sure the weighting is based on fair factors!), and that your team is recording their hours in Kobas rotas.
We’ve also created a Tips Policy template for users to download and fill in, which includes everything you need to comply with the new law. Make sure this is kept up to date and available to all your staff.
