4. Ensure you’re compliant on tipping
Are you familiar with the Employment (Allocation of Tips) Act 2023? (Err, hello, what?). It’s a piece of legislation – expected to be introduced on July 1 this year – that creates a legal obligation on employers across all sectors (including hairdressing) to allocate all tips, gratuities and service charges which they are paid or which they exercise control or significant influence over to workers, without any deductions. It also requires employers to ensure that the distribution of qualifying tips between workers is fair.
The legislation and draft code concern what is called ‘Employer-received tips’, which involve tips paid by a consumer and subsequently allocated and distributed to workers by the employer. For example, a client pays a tip via card payment made into the employer’s bank account before being distributed to the workers.
This is different to ‘Employee-received tips’, whereby the employer has no control over how the tips are distributed. For example, if a client pays one of your team members a cash tip that the team member is entitled to keep for themselves. Employee-received tips are not covered by the legislation.
With the aim of promoting fairness, the new legislation places great weight on an employer’s duty to be transparent when it comes to tips and how they are allocated and distributed. To ensure transparency, employers will be required to:
• Have a written policy in place for how tips are dealt with at their place of work: This policy must be made available to all employees and agency workers.
• Consult with workers to seek a broad agreement that the allocation of tips is fair, reasonable and clear. As above, factors determining the allocation of tips must be included in the written policy.
• Keep a record of tips received and distributed to each employee for three years from the date of the tip: All records need to be kept for three years from the date that the tip or service charge is made by a consumer.
• A worker has the right to make a written request (limited to one request per worker in one three-month period) to view the tipping record for a period dating back three years. If a request is made, the employer must provide:
The individual’s tipping record; the total amount of qualifying tips received by the employer (i.e. Employer-received tips); and the amount of tips paid to that specific individual (tipping records of other individuals must not be disclosed as part of this process).
(Luckily for customers of salon software Phorest, as Salon Smart presenter Mark Ronayne confirmed, there’s a free update that ensures your customers can still tip, and you will stay compliant. For more info visit phorest.com)