A London restaurant, Ping Pong, has introduced a new tipping policy in anticipation of the upcoming Employment (Allocation of Tips) Act 2023.
Understanding the Tipping Act
The Employment (Allocation of Tips) Act will introduce key provisions, including:
- Mandatory Passing of Tips: Employers must pass on 100% of tips to staff without any deductions, except those required by tax law.
- Statutory Code of Practice: Employers will have a duty to observe the Code of Practice which will profile principles of fairness and transparency.
- Written Policy Requirement: Employers will be require to have a written policy on tips that ensures consistent distribution.
- Equality for Agency Workers: Agency workers will be entitled to the same benefits under the Act as regular employees.
Tipping Policy
Ping Pong is piloting a policy that eliminates card-based tips. Customers can still leave cash tips, but the previous optional 12.5% service charge (of which 90% went to staff) has been removed from customer bills. In its place, the restaurant is introducing an optional 15%, “brand fee” directed towards franchise fees and other brand-related expenses.
To compensate for the removal of the service charge, Ping Pong is raising staff wages by 19%, bringing the minimum hourly wage to £12.44.
A Strategic Trial
This proactive approach by Ping Pong highlights the restaurant’s commitment to fair compensation for its staff while navigating the new regulatory landscape which may occur due to the Employment (Allocation of Tips) Act 2023. As the hospitality industry adapts to changing legislation, it will be interesting to see how other establishments respond and what long-term impacts these changes will have on employee earnings. For specific help and guidance on what this means for your business, please contact [email protected].
