Since October 2024, employers cannot keep tips left for workers. The Employment (Allocation of Tips) Act 2023 requires all tips to be passed on in full and fairly. Here is what you need to know.
For years, UK workers in hospitality, hairdressing, and other tipped industries had no legal right to keep tips left by customers. Employers could deduct service charges, keep card tips entirely, or use tips to subsidise minimum wage payments. This changed in October 2024.
The Employment (Allocation of Tips) Act 2023 came into force on 1 October 2024. It gives workers a legal right to receive 100% of tips — employers can no longer keep any part of them.
The Act is supported by a statutory Code of Practice on Tipping that sets out how tips must be distributed.
The Act applies to:
Employers must ensure that 100% of qualifying tips go to workers. They cannot:
Tips must be distributed in a fair and transparent way. The Code of Practice does not specify exactly how tips must be split, but employers must have a written tipping policy and distribute on a fair basis — one that does not unlawfully discriminate.
Employers must have a written tipping policy available to workers on request. It must explain:
Tips must generally be paid to workers by the end of the month following the month in which they were received by the employer.
Employers must keep records of tips received and how they have been distributed for 3 years.
Workers can request information about their employer's tipping practices. If you believe tips are not being distributed fairly, you can:
If an employer fails to comply with the Act:
Tips are subject to income tax. The tax treatment depends on how the tip is received:
Tips are not subject to National Insurance contributions where paid through a tronc operated independently of the employer. Employers cannot claim NIC relief and then withhold tips — these obligations are separate.
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