Millions of UK workers will take home an estimated £200 million more of their hard-earned cash, as employers are banned from withholding tips under the Employment (Allocation of Tips) Act 2023, which today (Tuesday 2 May) 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 2 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.

I want to thank Dean Russell MP, Virginia Crosbie MP and all the campaigners who have helped make the Tipping Bill a reality and improved the lives of workers across the UK.

Dean Russell, Conservative MP for Watford, said:

I am very pleased that my Tips Bill has received Royal Assent. Hard working people working in hospitality in Watford and across the country will be able to retain their tips, knowing that they will now have a fair deal.

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.

I would like to pass on my sincere thanks to every business and individual who has been in touch to share their support for my Bill.

Virginia Crosbie, Conservative MP for Ynys Môn, said:

I am pleased this bill is now law. Driving it forward was all about fairness for workers and for those who give tips for good service. 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, especially in tourist areas like Anglesey, and I am proud to have played my part.

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:

Fantastic hospitality experiences don’t happen without a huge effort from our teams, both front and back of house, and tips are a generous way of customers showing their gratitude, while providing a welcome boost to employees’ earnings. Tips are just one part of what makes working in hospitality a great job and career.

We’re pleased to support this new piece of legislation as it comes into law today 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.

Today’s 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 percent, 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.

Further recent government action to support households with the cost of living includes extending the Energy Price Guarantee at its current level for another two months, which keeps energy bills at £2,500 for a typical household until the end of June. We have also extended the freeze on fuel duty, saving the average car driver in the UK £100 over the next year.