The Department of Business & Trade (DBT) recently unveiled the complete draft of the Code of Practice for Fair & Transparent Distribution of Tips.
This marks a crucial advancement towards enforcing the Employment (Allocation of Tips) Act 2023. The legislation mandates that businesses where tips and gratuities are customary must distribute 100 per cent of these earnings to their employees via a fair mechanism, without deducting any costs.
However, an update provided by the Code of Practice is the postponement of the Act’s implementation date to 1 October 2024.
This delay grants hospitality businesses an additional three months to set up or refine tronc systems used for managing tips and to make necessary adjustments to comply fully with the new rules.
Preparation
Businesses must focus on two key preparation areas to align with the Act’s demands:
Between now and October 2024, it is important for businesses to assess their current systems and pinpoint potential areas for improvement.
Tronc systems and troncmasters
With the new law, the use of a tronc system becomes mandatory for pooling and allocating tips among staff. Businesses will need to define what constitutes a ‘fair distribution’ of tips and appoint a troncmaster responsible for overseeing this process.
Cash flow adjustments
A key aspect of the new legislation is the prohibition on employers keeping any part of the tips for covering expenses like card payment fees or the operation of tronc systems.
Businesses previously using tips for such costs must now adjust their financial planning to manage these expenses within their current cash flow.
For detailed advice on adapting to this legislation or any related inquiries, businesses should consult with a qualified professional from our team. Contact us today.
