Do you have to pass on 100% of tips to staff?
Employment (Allocation of Tips) Act 2023
When this applies
In force since 1 October 2024, if your workers receive tips, gratuities or service charges more than occasionally, you must pass them on in full, allocate them fairly, keep a written policy, and hold records for three years. If tips never feature in your business, this does not affect you.
When it does not apply
The Tips Act only applies to employers whose workers receive tips. With no staff, there is nothing to allocate.
What is at stake
Workers can bring a tribunal claim within 12 months of a breach. Tribunals can order you to revise your allocation, order payments to workers, and award up to £5,000 per worker for financial loss.
What to do
If your staff receive tips more than occasionally, pass on 100% of tips, gratuities and service charges to workers by the end of the month after they were received, with no deductions except tax. Keep a written tips policy available to all staff and records of allocations for three years. Follow the statutory Code of Practice on fair and transparent distribution.
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Check your business →Reviewed: 2026-07-10 · Source: official guidance