The government has published new tipping legislation, which it says will support millions of workers take home an estimated £200m.

The Code of Practice on the fair and transparent distribution of tips will make it unlawful for businesses to hold back service charges from their employees.

The measures are expected to come into force on 1st October 2024 – three months later than originally planned, a delay which was welcomed by industry groups.

TiPJAR, the tips and tronc solution founded by BrewDog Bars CEO James Brown, was consulted to help develop the legislation.

According to TiPJAR, the bill ensures agency workers are treated in line with directly employed staff concerning tip distribution.

The code now includes hours worked during the period that tips were received as a factor to consider in businesses implementing a ‘fair’ distribution under the legislation.

The code advises employers to engage with their workforce in developing tipping policies and reinforces that team members’ view of “fairness” will be a consideration.

Tips collected digitally, directly from customers to staff, are not considered employer-received tips and are out of scope, subject to correct operation of these platforms and relevant HMRC guidance.

CEO of Tipjar, Ben Thomas said: “As a business that exists to help employers distribute tips on the same principles of fairness and transparency, we are confident that this Act will support millions of tipped workers across the UK, and level the playing field for businesses across these sectors. We’re excited to support employers in leveraging the opportunities this will present, as we build a more fair and transparent future.

“These measures follow a series of wins for workers after a record National Minimum Wage uplift and boosts to employment protections for parents and unpaid carers, as well as giving all employees easier access to flexible working.”

Business and Trade Minister Kevin Hollinrake said: “It is not right for employers to withhold tips from their hard-working employees.

“Whether you are cutting hair or pulling a pint, this government’s legislation which will protect the tips of workers and give consumers confidence that when they leave a tip, it goes to the hardworking members of staff.

“The secondary legislation laid today reinforces our commitment to legally protecting our low paid workers and ensuring a fair day’s pay for a fair day’s work.”

UKHospitality said it was appropriate that the implementation of the new tipping laws had been pushed back three months to give businesses time to implement required changes.

CEO Kate Nicholls said it was important to have a “fair and transparent” tipping system, and welcomed the code of practice.

She said: “With the variety of businesses in hospitality, anything too prescriptive would not have been practical.

“Delaying the implementation for a further three months is an appropriate step. The revised timeframe will now allow businesses to implement any changes required and is evidence of government acting on feedback from UKHospitality.

“It is disappointing, however, that the government has not provided greater clarification of agency workers and the payment of tips, which is a particular sticking point for businesses.

“Given the desire from all parties involved to get this legislation right, we would urge government to work with UKHospitality on providing greater clarity on this issue before the legislation comes into force in the Autumn.”