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Employment Update for Small Businesses
May 2024

Dear Subscriber

Those of you in the hospitality industry will be interested to hear that a new piece of legislation regarding the allocation of tips to staff has been delayed until October. We have a look in this month’s update at its requirements. Also, if you struggle to provide regular hours to staff throughout the year, have you ever considered putting them on annualised hours? Read on to learn more.
Please contact me if you would like to find out a bit more about any of the subjects raised in this update or if you need any help or advice.

Please forward this email to any of your contacts who might find it of benefit.

Peter Etherington
Tel: 01664 668164


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Peter Etherington
Employment (Allocation of Tips) Act 2023
Commencing 1st October 2024
This new legislation affects employers who receive tips intended for their staff. It requires the tips to be passed onto the staff, and to have a clear policy regarding allocation of tips. It does not apply if staff receive tips directly from customers.

A new statutory Code of Practice has been published to provide more details of the requirements, it is still in draft but is the final draft following consultation so is unlikely to change.

Key considerations in determining how to allocate tips include ensuring any received by electronic payment (e.g. credit card) are included, and ensuring that how the tips are allocated does not indirectly discriminate against some staff members (e.g. if front of house staff receive proportionally more than those in the kitchen, when the front of house staff are predominantly men and the kitchen staff are predominantly women).

If you need help preparing for this new law, including drafting an appropriate policy, please contact us.

Annualised Hours
How to cope with peaks and troughs of work
We have a few clients who we have helped introduce annualised hours for their staff. This month we look at when it may be appropriate to introduce such a scheme and how it may benefit employers and employees alike.

Employers in some sectors struggle to provide standard working hours throughout the year and require a high degree of flexibility. That can be the case, for instance, for those supplying gardening services, child care and in the hospitality industry. This could be addressed through the use of zero hours contracts, but they do have a bad press and create uncertainty for workers who struggle with finances due to the often big variation in income.

An annualised hours system could apply where the employer is able to make a reasonable estimate of the total number of hours an employee is likely to work over the year, taking into account expected fluctuations. For instance, we are currently working with a garden services company and they know that winter hours will be reduced because reduced daylight hours means the working day needs to finish earlier than in the summer months. They also know there will be a three week period over Christmas where there will be no work and that there will be some days lost due to bad weather. That has helped us arrive at an annual hours total, which can be used to put staff on an annual salary (by multiplying the annual hours. including an element to cover holiday, by the hourly rate). The employee is then provided with a monthly salary of 1/12 of the annual figure.

The benefit to the employee is that they have a guaranteed monthly income and can plan their finances accordingly.

It does take close management by the employer, as they need to keep track of hours worked and to ensure they stay close to the estimate number of hours. There will also be points in the year when a reconciliation takes place which could result in a top up payment being made if hours are higher than estimated, or an agreement to reduce hours and pay for the remainder of the year where there is a shortfall.

We help employers introduce annualised hours arrangements to staff, and to make the appropriate contractual changes, so please get in touch if you are interested in this approach.

National Minimum and Living Wage
The current National Living Wage and National Minimum Wage rates are:

  • £11.44 per hour for workers aged 21 and over
  • £8.60 per hour for workers aged 18 to 20
  • £6.40 per hour for workers aged 16 and 17; and for apprentices under 19 and those over 19 in their first year*

*N.B. Apprentices over 19 and who have completed at least one year are entitled to the appropriate rate for their age.


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