Tipping legislation now in force - October 2024
- timcundy
- Mar 30
- 3 min read
The change in tipping legislation is finally here!
The Employment (Allocation of Tips) Act 2023 (or the “Tipping Act” as it is often called) will be in force for October payrolls – so if you still have not got all your ducks in a row, it’s not too late!
Below is a summary of the areas you need to sort out, as well as some of the major changes you should be aware of.
Written Policy is Now Mandatory
First and foremost, you must have a written policy explaining how tips are distributed.
This is not optional; it's a legal requirement. If tips or service charges are given at one of your venues, you must have a policy.
Your policy should cover:
How tips are collected (cash, card, service charge)
How tips are allocated among staff
How tips are distributed (timing and method)
Steps to ensure fair and transparent handling
You need to make sure that every staff member has access to this policy and the policy should be clear and easy to understand.
If we look after your tronc at Monty and you do not have a copy of your policy to display – do get in touch and we will send you over your copy.
If we don’t look after your tronc and you need help getting this in place, please drop us a line.
Fair Distribution is Essential
Tips must be shared out fairly and transparently (it’s basically the whole point of this legislation). While the Act doesn't define "fair”, it allows for factors such as different roles, seniority, performance etc. In this respect the guidance seems to track how traditional tronc schemes have been set up in terms of distribution methods.
Fair distribution can be challenged at employment tribunal. So as you set up your tipping policies, document your rationale—it could be crucial in case of disputes.
You can still use a tronc system
All the benefits of a tronc system remain, with the added bonus that a tronc system (if operated properly) can shield the company from complaints on fair tips which can come from employment tribunals.
Tronc rules need to be updated to be in line with the Tipping Act and the company Tipping Policy.
Employees can ask for tip calculation
There are a few rules about this, but essentially you need to keep records of how you have calculated tips so you can provide these to an employee if requested (and produce these at employment tribunal if required).
If you are paying your tips through a tronc scheme, the burden of these requests will likely fall on your tronc master.
Remember, all workers are included
Not just employees, but contractors and temp workers are entitled to a share of tips. If you are regularly using temp workers you should engage with the employment agency to agree how this will work practically as they may be on different pay schedules to your employed staff.
How you calculate tip distribution will likely change
We know most of our clients have already got themselves in order and are already distributing in a way which is compliant with the legislation, but if you have been waiting for the last minute, please remember that how you are distributing tips will likely have to change;
100% of tips must be distributed to staff, no deductions (other than PAYE/NI when paid)
Anything that looks like a tip, is a tip (a few restaurant groups were playing around with wording here a few months ago – from what we can see they have ALL abandoned these ploys – the legislation is clear)
Payments must be made quickly – at the latest all tips must be distributed the month after they are collected.
Please remember; this is just a quick run through of the biggest changes – it is not exhaustive nor is it tailored to you.
If you would like to run through the explanatory notes published by the government (and who wouldn’t?!?!?) you can access them here;
If you are not confident that you are complaint with the upcoming legislation, please drop me a line and we can help you get there.
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