It is our position that they amount to the same thing. We know from customer behaviour that when a customer sees a service charge on their bill, they will usually not tip at that point because they believe that the service charge is a tip. We feel that that is in the same category, which is why we have categorised them together in this instance.
The Employment (Allocation of Tips) Act 2023 was a relatively simple piece of legislation, but one with an important purpose. Following the justified public examination a few years ago of the spectacle of some businesses retaining significant percentages of tips or even keeping them altogether, the Government committed to backing a private Member’s Bill on tipping. The law mandates that all qualifying tips must be passed on to the workers who earn them, rather than being retained by businesses, and it sets out that these tips must be allocated and distributed in a fair and transparent manner.
I reiterate my appreciation, which I set out at this Dispatch Box earlier this year, for the cross-party support that the primary legislation engendered, and for the positive and constructive tone in which all the parliamentary stages were conducted. I want to extend further thanks in particular to the original Bill’s sponsors, my hon. Friends the Members for Watford (Dean Russell) and for Ynys Môn (Virginia Crosbie), and subsequently Lord Robathan in the House of Lords. Today we are another step closer to bringing these important measures into effect.
It was remarked at the time that the detail was crucial, and we elaborated on that detail in December with the publication of the draft statutory code of practice on fair and transparent distribution of tips. I am grateful for the large volume and quality of the responses we received during the public consultation that followed. Everyone who provided feedback, whether via an online survey, through an email response or in a meeting with officials at my Department, should know
that their views have been considered carefully. Responses have been used to amend and enhance the code, and will continue to inform the communications and support for businesses implementing these measures.
We were pleased to lay the updated code of practice before Parliament on Monday 22 April. The code was also published on gov.uk alongside a full Government response to the consultation, which provides more detail on the feedback received from businesses, workers and other stakeholders. I trust that right hon. and hon. Members have had, or will have, the opportunity to study the detail of the code in their own time, but I will briefly set out its provisions here today.
The code of practice contains summaries of the key intentions of the Act. The code sets out the scope of this legislation, emphasising that it covers all qualifying tips—that is, employer-received tips and worker-received tips over which an employer exerts control or significant influence. These measures apply to every sector and across England, Scotland and Wales. The code goes on to provide more detail on the need to maintain fairness in the allocation and distribution of tips. Rather than being prescriptive and potentially burdensome to employers, the code articulates key principles for employers to consider, protecting both the rights of workers and flexibility for a variety of approaches from businesses.
The code helps employers to engage in constructive and positive consultation with their workers, and helps to minimise the risk of discrimination, which may be indirect or unintentional, if due care is not taken. The code sets out that employers need to uphold transparency in the handling of tips. This includes keeping a written tipping policy that is clearly communicated to all affected workers. This requirement also includes retaining accurate tipping records to which workers have the right to request access. One thing to note is that this need to maintain a written tipping policy and make it available to workers does not apply to businesses that receive tips only on an occasional and exceptional basis.
Finally, the code expands on how to resolve conflicts that arise between employers and workers. While early and internal resolution of issues is preferable for all involved, workers may consult ACAS for impartial advice and assistance in resolving problems. The code informs workers about how an unresolved dispute may be escalated to an employment tribunal.