You've probably seen how the new legislation around tips, refers to qualifying tips. Working out what qualifies as a tip might not be so straightforward, so we're hoping the following information will help clear some of the mud:
Qualifying tips can include tips that have been received by the employer, and some tips that have been received by a worker. Any tip which is controlled in any way by an employer will usually be classed as a qualifying tip.
An employer received tip is an amount which has been paid by a customer as a tip, gratuity or service charge. This may be received at the time of payment or subsequently, by the employer or an associated person, or, it's received at payment by a person under a payment arrangement made between the employer and that person.
An employer is likely to receive a tip by card or via an electronic method, for example, through a mobile app, or a scanned QR code. This would be an example of an employer received tip, for which the employer is responsible for distributing.
A worker received tip is also an amount paid by a customer as a tip, gratuity or service charge. It is received at the time of payment by the worker, and is not subsequently received by the employer or an associated person.
A worker received tip must be subject to employer control. This is when the employer, or an associated person, exercises control or significant influence over the allocation of the tip. For example, this would include instances when a cash tip is collected from workers and then distributed out to staff.
If a worker receives and keeps a tip, with no employer involvement or control, then the tip is out of scope and is not a qualifying tip.
If a customer uses a digital app to pay a worker directly, therefore bypassing the employer, this is also out of scope and not a qualifying tip.
If a customer uses a digital method which means the tip goes to the employer, who then has control or significant influence allocation, the tip will qualify, and will be subject to the scope of the law.
Please note that the information above has been provided in good faith, and in no way should it be viewed as legal advice.
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