EPOS and Payment Processing Specialist | Haven Systems Haven Systems in an established software development house specialising in Electronic Point of Sale, Payment Processing and Management Information Systems.

Tipping Laws are changing – are you prepared?

From October 1st, 2024, the Allocation of Tips (Employment) Act 2023 will require businesses to ensure that employees receive the full tip from customers. The implementation of this act is reported to benefit more than two million workers in the UK hospitality industry.

The act sets out the rules for tip distribution, including a timeframe in which they must be paid.

What is a tip?

Tips are defined as “a monetary gift or payment that is often given for a service performed or anticipated”. They can include vouchers, stamps and tokens, or anything similar that can be exchanged for monetary value, goods or services.

How should tips be paid?

All tips, gratuities or service charges must be paid to staff and cannot be subject to deductions, including administrative fees. They must be paid by the end of the month following the customer’s payment. Tips must be distributed fairly and transparently.

What about paperwork?

The new law states that there must be a tips policy that details how the employer ensures that all tips are paid and distributed fairly. They must also keep a record of all tips received and the details of their allocation for up to three years.

What about agency workers?

All agency staff will be entitled to receive tips in the same way as regular employees. All staff will have the right to request tip details, such as the total received, and the amount paid to them.

All staff also have the right to raise tip disputes through an employment tribunal and have 12 months to make a claim.

Should you use a TRONC?

A TRONC is an arrangement used by UK businesses relating to the collection, allocation and distribution of tips, typically from customers within the hospitality industry. It ensures that tips are distributed through the payroll without being subject to Employers’ or Employees’ National Insurance.

It’s important that your EPOS System allows for the setup and management of a ‘Service Charge’ value and that all transactions are recorded and may be reported on. Alongside this, having the option for staff members to ‘Clock on and Clock Off’ and their hours recorded accurately ensures ease of use in terms of retrospectively allocating TRONC funds fairly.