ICB continues to explain about the contents and provisions within the Great British Employment Rights Bill introduced by the UK Government on 10 October 2024.
This time, we look at the provisions with regard to the 01 October 2024 requirement on employers to maintain a written policy about the allocation of tips, service charges and gratuities.
The Current Situation
The Employment (Allocation of Tips) Act 2023 (the ‘Tipping Act’) came into force on 01 October 2024 courtesy of The Employment (Allocation of Tips) Act 2023 (Commencement No. 2) Regulations 2024. The legislation updated the Employment Rights Act 1996 and requires employers to adhere to an Acas Code of Practice when passing on qualifying tips (service changes and gratuities) to qualifying workers.
ICB has written about this and presented the topic via the monthly Wages Wednesdays so that bookkeepers are aware this will not impact them operationally in terms of the Income Tax and National Insurance treatment, as nothing has changed. One of the things that did change was the requirement for employers to maintain a written policy on how tips are dealt with at their place of business and ensure this is made available to all workers.
The Proposed Situation
Simply, the Employment Rights Act 1996 will be updated to say that:
- Before producing a first version of the written policy, employers must consult (with a trade union or worker representatives if they exist. Where they do not exist, the employer must consult with workers that will be impacted)
- The written policy must be updated ‘from time to time’ in consultation with the above. The requirement to review is at least every three years, plus
- The written policy must contain a section about the consultation that has taken place
For Bookkeepers
Again, this does not affect the Income Tax and National Insurance treatment of tips (service charges and gratuities). It only affects the employer’s obligation to consult on the written policy and ensure it is reviewed periodically.
It is unlikely this element of the 2024 Bill will come into force until a date in 2026 and, again, it is unlikely the UK Government will consult on these measures.
Via Wages Wednesdays and ICB’s newsletter, we will keep you updated on the progress on the entire Bill, as this measure impact clients, especially those in the hospitality sector where tips are the most common.