{"id":2518,"date":"2026-04-19T13:56:18","date_gmt":"2026-04-19T12:56:18","guid":{"rendered":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/?p=2518"},"modified":"2026-06-23T14:23:05","modified_gmt":"2026-06-23T13:23:05","slug":"tips-for-staff","status":"publish","type":"post","link":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/tips-for-staff\/","title":{"rendered":"Tips and Gratuities for Staff"},"content":{"rendered":"\n

[Updated 18<\/strong> June<\/strong> 2026<\/strong>]<\/p>\n\n\n\n

The legislation and Code of Practice aim to discourage employers from holding back or diverting a share of the tips for the benefit of the employer rather than employees. The legislation includes agency workers but does not apply to the self-employed.<\/p>\n\n\n\n

Employers are required to ensure that tips intended for staff are passed on and allocated in a fair way and without deductions or, for example, holding back a percentage of the tips. <\/p>\n\n\n\n

Managers should note that tips do not count towards the National Minimum Wage.<\/strong><\/em><\/p>\n\n\n\n

What Tips<\/strong> are Covered<\/strong>?<\/h4>\n\n\n\n

– cash and other forms such as vouchers which can be turned into cash;
– service charges added by the employer to a bill;
– tips that customers give to staff which the employer then divides between staff;
– tips that are paid via an app or into the business’s bank account e.g. electronic transfers.

The Act does not extend to tips over which the employer has no part to play in their allocation. For example, tips left on the table, for staff to pocket, are not affected by the Act. Employees are responsible for declaring such tips and the payment of any income tax or National Insurance due.<\/p>\n\n\n\n

Policy on Tips <\/strong><\/h4>\n\n\n\n

Employers are required to have a policy on how tips will be allocated. It will be helpful to include in that policy, which tips and gratuities are covered or not covered.<\/p>\n\n\n\n

Tips that are covered by the legislation are referred to as ‘qualifying tips’.<\/p>\n\n\n\n

Some businesses arrange for tips to be distributed to staff via their payroll, those will be deemed to be qualifying tips and subject to the legislation. <\/p>\n\n\n\n

Employers’ Duties re \u201cqualifying tips\u201d<\/strong><\/h4>\n\n\n\n
    \n
  • Tips should be allocated to staff by the end of one month following the month in which the tips are provided to\/collected by the employer;<\/li>\n\n\n\n
  • Pass on all tips in full to staff without any reductions. The exception is in respect of deductions for income tax and National Insurance Contributions;<\/li>\n\n\n\n
  • Maintain a written policy on tipping and detailed records if tipping is a regular occurrence in the business. Records should detail the total amount of tips received at the workplace and the amounts distributed to staff. These records must be retained for a minimum of three years;<\/li>\n\n\n\n
  • Although the statutory Code of Practice regarding tips does not include any legal sanctions for breaches, an Employment Tribunal may take the Code into consideration when relevant to the facts of a tribunal case;<\/li>\n<\/ul>\n\n\n\n

    Handing over the distribution of tips to an external body may seem attractive but the employer will remain liable for ensuring that the practices ‘within’ the business meet the requirements of the Code. A well established provider of such services (often referred to as tronc services) may be an appropriate option for some businesses especially if there is a high volume of regular tipping.<\/p>\n\n\n\n

    Employers may not contract out of the tipping Act.<\/em><\/strong><\/p>\n\n\n\n

    Future<\/strong> Changes regarding the Management of Tips <\/strong><\/h4>\n\n\n\n

    Later in 2026, it is expected that businesses will be required to consult with their staff directly or via trade union or workforce representatives about their tips policy. Consultation may be required every three years thereafter.<\/p>\n\n\n\n

    Reference:<\/strong> <\/p>\n\n\n\n

    The Employment (Allocation of Tips) Act 2023<\/p>\n\n\n\n

    Code of Practice on Fair and Transparent Distribution of Tips<\/p>\n\n\n\n

    <\/p>\n","protected":false},"excerpt":{"rendered":"

    [Updated 18 June 2026] The legislation and Code of Practice aim to discourage employers from holding back or diverting a share of the tips for the benefit of the employer rather than employees. The legislation includes agency workers but does not apply to the self-employed. Employers are required to ensure that tips intended for staff […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"wds_primary_category":0,"footnotes":""},"categories":[4],"tags":[],"class_list":["post-2518","post","type-post","status-publish","format-standard","hentry","category-terms-of-employment"],"jetpack_featured_media_url":"","post_mailing_queue_ids":[],"_links":{"self":[{"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/posts\/2518","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/comments?post=2518"}],"version-history":[{"count":24,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/posts\/2518\/revisions"}],"predecessor-version":[{"id":2577,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/posts\/2518\/revisions\/2577"}],"wp:attachment":[{"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/media?parent=2518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/categories?post=2518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/hr-management-dimensions.co.uk\/HRMDmn\/key-hr-facts\/wp-json\/wp\/v2\/tags?post=2518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}