Legislation proposal for tipping – what does it mean for employers?

Employment Law, For Employees, For Employers

Update: Employment (Allocation of Tips) Act 2023

The Employment (Allocation of Tips) Act 2023 is coming into force on 1 October 2024 rather than the originally proposed 1 July 2024.

Under this act, employers will be required to:

  • Pass on all tips and service charges to workers.
  • Ensure that tips are distributed in a fair and transparent manner.
  • Have regard to the Code of Practice on fairness and transparency of tip distribution.
  • Maintain a written policy on how tips are dealt with at their place of business, and ensure this policy is made available to all their workers.
  • Maintain a record of all tips paid at their place of business and their allocation and distribution between each worker, to which workers have the right to request access.

The Code of Practice on fairness and transparency of tip distribution is available to view here.

What can employers do to implement the changes?

If you haven’t already got one, employers should consider setting up a ‘tronc’ system, where any tips, gratuities and service charge is distributed fairly between employees. There will be an elected ‘troncmaster’ who will decide how the tips should be divided. They will also be responsible for informing HMRC and running payroll, ensuring tips will be excluded from national insurance contributions.

What does it mean if employers break the rules?

If employers make any deductions from wages without prior written consent, they are in breach of contract. Check your contracts is there a deduction from wages clause that covers this?

Any unlawful deduction of wages could result in the employer being taken to an Employment Tribunal to recover these sums.

How can Thrive help?

If you are unsure of whether you are managing Tips at work correctly andf need some guidance,  or are looking for an outsourced HR partner to assist in the management of your workforce, please get in touch today at


Please note this blog is for reference purposes only and is only accurate at the date it was published. It does not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking or deciding not to take any action. Please contact us if you have any questions at

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