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UK employees working in hospitality, hair and beauty or taxi firms are set to be impacted by a new piece of legislation surrounding their tips, which has come into play today (1 October).
And though experts say this is news that British business owners have 'been gradually getting ready for', it's unlikely that all will be pleased by the new rules.
What were the rules on tipping?
This often saw businesses withholding tips, which customers had intended to give to their employees.
Business had the right to decide their own rules on tipping, pooling tips or placing tip money back into the company.
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It was also at business owners' discretion whether to add a service charge onto the bill or not.
What is the new rule?
The newly implemented piece of legislation will see tips taken by a business shared equally amongst its employees.
This includes cash left on the table following a meal, tips added via car, and the service charge that many business already add to a receipt when handing a customer the bill.
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No deductions can be taken by employers.
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Known as the Employment (Allocation of Tips) Act and the statuary Code Of Practice on fair and transparent distribution of tips, the new law will come into place from today (Tuesday 1 October 2024).
If an employer breaks this law and keeps a tip that should be shared, the employee can bring a claim to an employment tribunal.
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Employers in the wrong could be made to pay fines or compensation to staff, with workers able to hold bosses fully accountable through employment tribunals.
Who will the change effect?
Naturally, the new legislation will impact the finances of many businesses the most, as well as company's owners.
According to Kate Nicholls - who is the CEO of UK Hospitality - however, businesses have been expecting the change for a long while.
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Claiming they've 'been gradually getting ready for this', she believes the majority of UK firms are now moving towards adopting a code of best practice, which has been endorsed by unions.
Saxon Moseley, meanwhile - who works as the head of leisure and hospitality at consultancy RSM - has issued a warning to businesses about their need to continue paying their staff fairly, even if they previously used the service charge to pay staff or offset their wage bill.
They also won't be able to use this cash fund, he says, adding: "And in that scenario, margins will be hit, in some cases fairly drastically."
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It means, however, that employees who work long hours, anti-social shifts and often endure overtime will keep 100 per cent of the money they've earned through tips.
According to the Government website, the new change is also expected to boost wages, by rightfully putting £200 million back into the pockets of workers.
Rhianna Benson