News & Insights: Allocation of Tips & Minimum wage

These changes in 2024 will have a big impact for Hospitality

In 2024 we will have two big changes happening, this will affect Hospitality and you will need to start planning now. The biggest change is the allocation of tips, as this will affect agency workers who are paid on a agency PAYE and your own casual staff. Many companies have moved towards a fixed allocation of service charge, based over a month, this will affect this and could mean it based on a day or hourly rate.

In addition to this, minimum wage will be going up as well from 2024, which was announced at the conservative party conference in October 2023, this will happen from April 2024.


Minimum wage (living wage)

It was announced, for over 21 year olds, this will now be at £11.44 per hour. This means if someone works 40 hours, the wage is £23,795. A 45 hr contract is £26,769 and a 48 hr contract is  £28,554. This is basic wage excluding tips and service.

  hours Annual
over 21 yr old 37hrs £22,010
  40hrs £23,795
  45hrs £26,769
  48hrs £28,554

There are things you will need to start to do, this will include:

  • budget for the difference
  • review the hours you require your team, do they all need to be on a 48 hr week contract or can some be on 40 hours or 45 hours
  • review the opening hours of your business, if you have a quite day, do you require to be open or can open later?
  • review technology, can you use technology to reduce manual labour, which in turn, can help staff feel happier and also it means they can work 40 hours and not 48 hours

The rates for under 21 year olds, at the time writing this has not been released yet.

  NMW Rate Increase in pence
National Living Wage (21 and over) £11.44 £1.02
18-20 Year Old Rate £8.60 £1.11
16-17 Year Old Rate £6.40 £1.12
Apprentice Rate £6.40 £1.12

Allocation of tips:

The Employment Allocation of Tips Act 2023 received royal assent earlier this year and is expected to come into force in 2024. This new law will make it illegal for companies in the UK to take a portion of the service charge or tips from their staff who are employed on PAYE by restaurants or hotels.

For years, there have been reports about how some restaurant and hotel chains were pocketing a portion of the service charge or tips left for their staff by customers. This act will put an end to this unethical practice, ensuring that all tips are fairly distributed among the employees who provided the service.

The act will require companies to be transparent about their tipping and service charge policies and inform customers if any portion is kept by the business. It will also give employees the right to challenge any decision made by their employer on the allocation of tips. Further, it will ensure that the tips are not used to make up the minimum wage, which will have a significant impact on the lives of low-wage employees in the hospitality industry.

This move comes as a great relief to many workers in the hospitality industry, especially those who rely on tips as a significant part of their income. It will help to ensure that their hard work is rewarded and that their employers cannot take advantage of them by keeping a portion of their tips.

Overall, the Employment Allocation of Tips Act 2023 is a significant development for employees in the hospitality industry. It will provide greater transparency and fairness in the distribution of tips and service charge, making it a win for both workers and customers.  This is for workers employed direct by a Restaurant, Hotel or Bar on PAYE either on a Full time, part time or casual contract.


HtE Recruitment News & Insights

This news and insights page has been written for HTE Recruitment using a number of methods & edited by HTE Recruitment.

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