New rules regarding tips paid to Staff 

If you accept tips from customers, you may be affected by new rules which are coming into effect soon. Ultimately, these new rules are designed to ensure that your staff receive any qualifying tips in a full and timely manner and that you follow a fair process to allocate how much an employee receives.  

When do the new rules come into effect?  

From 1st October 2024 

What is a qualifying tip?  

A qualifying tip is either: 

  • An employer received tip: a tip that you or your business receive and then you distribute to your staff 
  • A work received tip: ONLY if you have control over this tip 

The new rules do not apply to situations where you have no control or influence over a tip e.g. a staff member pockets a tip and keeps it without your involvement.  

What are the new rules? 

  1. All workers (including zero contract and casual workers) should receive a fair allocation of 100% of qualifying tips received 
  1. Tips should be distributed by the end of the month following the month in which the tip was received from the customer. 
  1. Affected employers should have a policy in place that sets out how they will fairly distribute tips, including how tips are allocated between workers in different roles within the business 
  1. The tips policy should be made readily available to all workers in the workplace 
  1. Tips distribution records must be kept for 3 years  
  1. Workers can bring a tribunal claim where their employer has failed to allocate tips fairly, or failed to pay tips by the end of the month following the month in which the tip was received from the customer 
  1. The new law on tips applies to all employers where qualifying tips are paid. 

If you have any questions, please contact our offices on 01227 770 500 

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