Tips Act 2023: UK Tips Law Explained
The Employment (Allocation of Tips) Act 2023 rewrote the rules on restaurant, bar and cafe tipping: 100% of qualifying tips belong to workers, distribution must be fair and transparent, and you have a right to see the records. Here is what the law says and how to enforce it.
By the TipsPay UK editorial team · Updated $1
Key numbers at a glance
| Protection | Rule | Since |
|---|---|---|
| Tips passed to workers | 100% of qualifying tips, service charges & gratuities | 1 Oct 2024 |
| Deductions allowed | Tax (PAYE) only; tronc masters may deduct reasonable admin | 1 Oct 2024 |
| Agency workers | Covered — must get their fair share | 1 Oct 2024 |
| Tipping records | Kept at least 3 years; workers can request them | 1 Oct 2024 |
| Tribunal claim window | 3 months less 1 day (ACAS early conciliation first) | ongoing |
Per the statutory Code of Practice (GOV.UK). General information — not legal advice; verify with GOV.UK and ACAS.
What the Tips Act changed
Before the Act, tipping was mostly a matter of custom: an estimated majority of hospitality employers passed tips on in full, but nothing stopped deductions for "administration", card processing fees, or simple retention of a share of the service charge. The Employment (Allocation of Tips) Act 2023 — in force since 1 October 2024 — made retention unlawful. Employers must now allocate 100% of qualifying tips, service charges and gratuities to workers, with only two permitted deductions: tax collected through PAYE and, where a tronc is used, the tronc master's reasonable administration costs.
The Act arrived with teeth and structure. A statutory Code of Practice on fair and transparent distribution sets the standard employers must meet: allocations must be fair between the workers at that place of business (balancing, say, front-of-house against kitchen), decided objectively, and explained. Tips must be distributed by the end of the month following the month they were received — no sitting on the Christmas pot until March. And crucially, the Act extends beyond employees: agency workers must receive their fair share for the work they did, ending the old trick of excluding temps from the tip pool.
Two boundaries stayed the same. First, tips never count towards the National Minimum Wage — your hourly wage must clear your age band on its own (£12.71 for 21+ from April 2026). Second, tips are taxable income: card tips and tronc payments run through PAYE, while cash tips you receive directly are still taxable but sit outside PAYE (HMRC guidance E24 explains the routes).
Your rights over tips at work
Right to 100%. Every qualifying tip, service charge and gratuity — cash, card, app — must reach workers. Business costs (walkouts, breakages, till shortages, card fees) cannot be funded from the pot.
Right to fair and transparent allocation. The method — hours worked, points, role, shifts covered — must be objective, applied consistently, and explainable. If the scheme is run through a tronc, the tronc master's rules must satisfy the Code too.
Right to records. Employers must keep tipping records for at least 3 years, showing what came in and what each worker was paid. Ask in writing for your record; a refusal is itself a breach you can take to a tribunal.
Right to act. Start with your manager or HR, then ACAS free early conciliation. Most claims must reach an employment tribunal within 3 months less one day of the deduction or refusal. The tribunal can order the employer to pay what was withheld and to change its distribution practices.
| Breach | Who enforces | Consequence for the employer |
|---|---|---|
| Keeping part of tips / service charges | Employment tribunal (worker claim) | Order to pay the tips owed; compensation and practice changes decided case by case |
| Unfair distribution between workers | Employment tribunal (worker claim) | Review of allocation against the Code; corrected distribution and/or payment |
| No tipping records / refusing access | Employment tribunal (worker claim) | Compensation award for the record-keeping failure, decided case by case |
| Paying below National Minimum Wage (tips used to top up) | HMRC on behalf of BEIS/DBT | Arrears repaid; penalties up to 200% of underpayment (capped £20,000 per worker) plus public naming |
| Unlawful deductions from wages | Employment tribunal (worker claim) | Repayment of deductions; claims within 3 months less one day via ACAS |
Enforcement details per GOV.UK minimum wage enforcement and the Code of Practice; tribunal outcomes vary — not legal advice. Source: HMRC E24 for tax treatment.
Five checks on your tipping statement
One: the gross pot matches what came in — card totals should reconcile with the till reports you can see. Two: deductions show tax only (plus, on tronc schemes, the tronc master's stated admin cost). Three: the allocation formula is written down and matches what actually landed in your payslip or cash handout. Four: agency and zero-hours colleagues who worked the qualifying shifts are in the distribution, not mysteriously absent. Five: the timeline — tips collected in a month should be distributed by the end of the next. Fail any check and the service charge vs tips explainer plus a records request is the fastest way to find out whether there is a real problem.
This page is general information, not legal advice. Rules and enforcement evolve — verify with GOV.UK, the Code of Practice, and ACAS (0300 123 1100) before acting.
FAQ
When did the Tips Act 2023 come into force?
The Employment (Allocation of Tips) Act 2023 took effect on 1 October 2024, alongside the statutory Code of Practice on the fair and transparent distribution of tips. Since that date, employers must pass on 100% of qualifying tips, service charges and gratuities.
Can my employer deduct admin fees or card fees from my tips?
No — employers cannot deduct administration costs or bank charges from qualifying tips. The only deductions allowed are tax through PAYE, and for tronc masters specifically, reasonable administration costs. If a deduction line on your tipping statement is not tax, challenge it.
Are agency and zero-hours workers covered by the Tips Act?
Yes. Agency workers are expressly covered and must receive their fair share of tips for work they performed at the business. Zero-hours, casual and part-year workers are covered too — the Act protects workers, not just employees.
How long must employers keep tipping records?
At least 3 years. Records must show how much was received in tips and service charges and how much was paid to each worker. You can ask to see your own tipping record, and employers who fail to keep or produce records can be taken to an employment tribunal.
Can employers keep tips to cover breakages, walkouts or till shortages?
No. Tips are the workers' money and cannot be used to cover business costs such as walkouts, breakages, refunds or card processing fees. Wage deduction rules also limit what can be taken from your basic pay without written agreement.
How do I complain about unfair tips distribution?
First request your tipping records in writing. Then contact ACAS, which offers free early conciliation — most tribunal claims must be started within 3 months less one day of the problem. An employment tribunal can order the employer to pay tips that were unfairly withheld and to change its practices.