Letter Seeking Agreement to Allocation of Tips Policy

On 1 October 2024, the Employment (Allocation of Tips) Act 2023 (the Tips Act) came into effect. 

Under this new legislation, employers are required fairly to allocate ‘qualifying tips’ to workers, including agency workers. ‘Qualifying tips’ include tips, gratuities and service charges which are either employer-received, or worker-received but subject to employer control. 

The Tips Act places weight on the employer’s duty to be transparent when it comes to tips and how they are allocated and distributed. To ensure transparency, the Code of Practice states that employers will be required to consult with workers to seek a broad agreement that the allocation of tips is fair, reasonable and clear. 

This Letter Seeking Agreement to Allocation of Tips Policy should be sent to affected workers to seek their agreement to the Company’s tip allocation policy.  The letter explains the factors that the employer has taken into account and asks for feedback on the proposals.  The letter advises workers that they will receive the Fair Allocation of Tips Policy when staff feedback has been considered.

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