What the tipping law requires of you

The Employment (Allocation of Tips) Act 2023 came into force on 1 October 2024, and it changed the tipping question from a matter of custom into a matter of compliance. Most venues already did the right thing. The Act is mostly about being able to SHOW that you did.

The money is the workers’

Qualifying tips, gratuities and service charges have to be allocated fairly between the workers at the place of business where they were earned. You cannot keep a share to cover card fees, breakages or administration. Anything a customer intended for the team reaches the team.

“Fairly” does not mean equally. A distribution that gives the kitchen a different share from the floor can be entirely fair — what it cannot be is unexplained.

You must have a written policy

Where tips are paid at your place of business on more than an occasional and exceptional basis — which in a restaurant or a bar means always — you are required to have a written policy for that place of business. It has to say two things:

• Whether you require or encourage customers to tip at all.
• How you make sure tips are dealt with under the Act, including how they are allocated between workers at that site.

One site, one policy. A group with four venues that operate differently has four policies, not one document with four appendices nobody has read.

You must keep a record, and they can ask to see it

You have to keep a record of the tips paid at the site and how they were allocated and distributed between each worker. Workers have the right to request access to it. That request is the part most venues are unprepared for: it is not a report you can assemble afterwards if the underlying numbers were never kept.

There is a deadline

Tips have to reach workers no later than the end of the month AFTER the month in which they were received. Service charge taken in March is paid out by the end of April. A tronc that settles quarterly does not meet this, however long it has settled quarterly for.

The code of practice is not advisory

There is a statutory Code of Practice on fair and transparent distribution of tips. You must have regard to it when you design your policy, and — this is the part worth knowing — a tribunal deciding a tipping dispute has a duty to take it into account. It is the document your arrangement will be measured against, so it is worth reading once properly rather than being introduced to it by a claim.

The code itself: Distributing tips fairly — statutory code of practice

Covers asks whether a job includes tips or tronc and shows the answer on the listing, because it is one of the three things candidates ask before anything else. It records what you state; it does not audit your allocation, and nothing here is a substitute for the policy the Act requires.

Acas on the same ground, in plainer words: Tips and service charges