9.1. All tips, gratuities and service charges must be passed on to workers. Currently an employer must have a written policy to demonstrate how tips are allocated to staff but if the policy is clear on how typs etc are allocated then employers are only ‘encouraged’ to consult staff on the allocation
9.2. The Employment Rights Act will bring in a requirement to consult with recognised trade union representatives, elected representatives or, if none, staff about the policy of allocation and then publish the results of that consultation. These provisions complement the provisions of the Tips Act 2023 which came into effect in October 2024, requiring employers to distribute tips fairly and transparently across the workforce.
9.3. It will be compulsory to review the policies and consult with staff every 3 years, including a requirement to produce an anonymised summary of the views obtained in the consultation process. Failure to consult will allow workers to present a complaint to an employment tribunal and receive compensation of up to £5,000 per worker.
9.4. These changes are expected to come into effect in October 2026 following consultation which is due to end on 1 April 2026.
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