Millions of UK workers will take home an estimated £200m more money, as employers are banned from withholding tips under the Employment (Allocation of Tips) Act 2023, which has received Royal Assent. Many hospitality workers rely on tips to top up their pay and are often left powerless if businesses don’t pass on service charges from customers to their staff.

This Bill makes it unlawful for businesses to hold back service charges from their employees, ensuring staff receive the tips they have earned. The measures are expected to come into force in 2024, following a consultation and secondary legislation.

This overhaul of tipping practices is set to benefit more than two million UK workers across the hospitality, leisure and services sectors, helping to ease cost-of-living pressures and give them peace of mind that they will keep their hard-earned money.

Business and Trade Minister, Kevin Hollinrake, said:

“As people face rising living costs, it is not right for employers to withhold tips from their hard-working employees. Whether you are pulling pints or delivering a pizza, this new law will ensure that staff receive a fair day’s pay for a fair day’s work – and it means customers can be confident their money is going to those who deserve it.”

Dean Russell, Conservative MP for Watford, said:

“I have always had reservations that some employers kept tips which were earnt by their staff. This new law will stop this immediately and will ensure that the tips are given to the individual staff member, or team.”

Virginia Crosbie, Conservative MP for Ynys Môn, said:

“It was never right that a minority of companies could pocket tips when the public wanted them to go to the person who served them or made their food. The law will now boost wages for what are often lower-paid jobs and not boost company profits at the expense of hard-working staff. But it is also about valuing the people who do important jobs in our economy. Through the Act, a new statutory Code of Practice will be developed to provide businesses and staff with advice on how tips should be distributed. On top of this, workers will receive a new right to request more information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal.”

UK Hospitality Chief Executive, Kate Nicholls, said:

“We’re pleased to support this new piece of legislation as it comes into law… and look forward to working with government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality. [This] Royal Assent follows a range of government action to support people with the cost of living and help those on lower incomes keep more of what they earn, whilst delivering on the government’s priority to halve inflation. Most notably, last month the National Living Wage increased by 9.7%, keeping the government on track to achieve its manifesto commitment for the National Living Wage to equal two-thirds of median earnings by 2024, provided economic conditions allow."