Requirement to deal with tips, gratuities and service charges Section 2: How tips must be dealt with
This section inserts sections 27D and 27E, which provide how an employer must deal with qualifying tips, gratuities and service charges. The obligations apply to the "total amount" of qualifying tips, gratuities and service charges paid by customers (subsection 27D(1)). This will therefore include any amount deducted (for example) by way of bank, payroll or administrative charges: the intention being that the whole amount paid by customers is available for allocation to workers. Subsection 27D(1) requires employers to allocate that total amount fairly between workers of the employer at the place of business where the qualifying tips, gratuities and service charges were paid or to which they are attributable (a place of business is defined at section 27X(1) to include any location where the employer’s activities are carried out permanently or temporarily). This means, for example, that qualifying tips, gratuities and service charges paid by customers at a particular restaurant will not be shared with workers at a different restaurant of the same employer. However, this is to be read with new section 27E (non-public places of business). The employer’s obligation to allocate fairly is also to be read with section 27F (independent troncs), inserted by section 3.
	Subsection 27D(2) supplements subsection (1) to ensure that where a worker is allocated an amount of the tips received by an employer, that amount is payable to the worker. Payments to the worker will be subject to any required statutory deductions, such as tax and national insurance where relevant. Section 13(1) of the Employment Rights Act 1996, as amended by section 11, allows the employer to make such deductions.