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Last updated: 5 Jan 2024
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Tipping Code of Practice (draft) – coming into effect July 2024

Mark Taylor, Head of Buzzacott’s Troncmaster Services, provides the latest update on the new tipping legislative requirements being implemented in July 2024 and shares what businesses in the hospitality sector can do now, in preparation.

Is your business ready? The Employment Allocation of Tips Bill goes live in

Background

Background

On 2 May 2023, the Employment (Allocation of Tips) Act 2023 (the Tipping Act) was granted Royal Assent. The Tipping Act provides for how employers must deal with an amount paid by a customer of an employer by way a tip, gratuity or service charge (relevant tips), as well as provide the Secretary of State to issue a Code of Practice (the Code) to promote fairness and transparency in relation to the distribution of such relevant tips.

On 15 December 2023, the government finally made available a draft of the Code and invited all interested parties and groups to review and provide their views on the draft through a 10-week consultation. All submissions made during the consultation period will be analysed, and the views provided will be considered, prior to a final version of the Code being published in Spring 2024, with a view to both the Tipping Act and the Code coming into force on 1 July 2024. The Code, once finalised, applies to England, Scotland and Wales and will be updated and reviewed regularly.

About the author

Mark Taylor

+44 (0)20 7710 3389
taylorm@buzzacott.co.uk

Background

On 2 May 2023, the Employment (Allocation of Tips) Act 2023 (the Tipping Act) was granted Royal Assent. The Tipping Act provides for how employers must deal with an amount paid by a customer of an employer by way a tip, gratuity or service charge (relevant tips), as well as provide the Secretary of State to issue a Code of Practice (the Code) to promote fairness and transparency in relation to the distribution of such relevant tips.

On 15 December 2023, the government finally made available a draft of the Code and invited all interested parties and groups to review and provide their views on the draft through a 10-week consultation. All submissions made during the consultation period will be analysed, and the views provided will be considered, prior to a final version of the Code being published in Spring 2024, with a view to both the Tipping Act and the Code coming into force on 1 July 2024. The Code, once finalised, applies to England, Scotland and Wales and will be updated and reviewed regularly.

What are the fundamental principles of the Code

 What are the fundamental principles of the Code

  • The factors in which the way allocations of relevant tips are made must be clear, objective, fair and reasonable to all workers;
  • For the purposes of the allocations, you are permitted to distinguish between workers based on a "clear and objective set of factors" and are not obligated to "allocate the same proportion of tips to all workers". This may be determined by seniority, job roles, or duration of service. However, any allocation process must be equitable and ensure that workers understand how the tipping process operates; 
  • A written policy on how relevant tips are dealt with must be made available to all workers, including agency workers;
  • Workers have the right to request information about the amount of relevant tips generated and their own award value, however, they are unable to request knowledge of the relevant tip amounts their fellow workers are allocated. Each worker may only submit one request in any three-month period; and
  • The Code confirms the Tipping Act requirement that all relevant tips must be passed on at the latest by the end of the following month in which those relevant tips are received. For example, relevant tips received on 23rd June must be distributed by 31st July.
What can my business do now

What can my business do now

Provide your view

If your business receives tips, provide your view during the consultation period. You can respond online or by email to nationalminimumwage@businessandtrade.gov.uk.

Review your tipping practice

In advance of the new tipping legislative requirements coming into force on 1 July 2024, you should review your current tipping practice. You must ensure it is fit for purpose and conforms with both the Tipping Act and the Code, as well as should you operate a tronc arrangement that it meets the requirements of HMRC’s E24 Guidance on tips, gratuities, service charges and troncs to secure national insurance contributions (NIC) exemption in respect of all relevant tips allocated through that tronc arrangement.

How we can help

How can we help

Save time and money

Choosing Buzzacott as your external troncmaster relieves your staff of the administrative burden of dealing with all relevant tips and lets them focus solely on their daily tasks at hand. 

Reduce exposure

Are you or your staff best placed to keep up-to-date with all the requirements of the Tipping Act and the Code plus meet HMRC requirements for NIC exemption? Choosing Buzzacott reduces your exposure. Our independent tronc schemes conform fully to the Tipping Act and the Code.

Transparency

Buzzacott are not influenced by employers, nor by bias or favouritism, and represents what’s in the best interest of all workers. We are completely transparent with our services and the way in which we operate any tronc arrangement, making your staff feel valued.

Improve staff retention

We understand the struggles that many businesses go through with recruiting and retaining staff, and the labour shortage in the hospitality industry only amplifies the matter. Our independent troncs are bespoke and tailored to assist you in recruiting, retaining and incentivising employees, giving you one less thing to worry about. 

Comply with the new tipping legislative requirements 

Importantly, where the employer makes arrangements for the total amount of the relevant tips to be allocated between workers of the employer at the place of business by an independent tronc operator, such as Buzzacott, and it is fair for the employer to make those arrangements, regard being had to the relevant provisions of the Code, then the employer is treated as having complied both with the Tipping Act and the Code.

Reduce NIC and keep HMRC at bay

Our independent tronc schemes are completely transparent, conform fully to HMRC requirements and provide NIC exemption thus offering significant savings to employers and staff. Having Buzzacott as your independent troncmaster safeguards you from any HMRC challenge.

Buzzacott has made the setup of the Tronc scheme easy to understand and it was a quick process. We have continued to receive monthly support as and when required, the team is responsive and send over reports promptly when requested .
Zara Ali – The Juice Smith

Download our checklist

Download our Tipping Act and Code of Practice Checklist

With the Employment Allocation of Tips Bill (Tipping Act) and Code of Practice set to come into force on 1 July 2024, it's crucial for your business to adequately prepare for compliance. Download our free checklist today to ensure you're ready for the upcoming changes.

Download our checklist now

Get in touch
Get in touch

Call us today on +44 (0)20 7710 3389 or email troncmaster@buzzacott.co.uk. Alternatively, fill in the form below and a member of our team will be in touch.

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