The UK Tipping Act: What Restaurant Operators Need to Know
Key Takeaways
The Employment (Allocation of Tips) Act 2023 requires UK restaurants to pass 100% of qualifying tips, service charges, and gratuities to staff with no deductions
Restaurants must distribute tips by the end of the month following receipt, maintain written records for three years, and have a transparent tipping policy
Tronc systems remain a valid option for tip distribution, but must now meet stricter fairness and transparency standards
From October 2026, the Employment Rights Act 2025 will require restaurants to consult their workforce on tipping policies every three years
Table of contents
If you run a restaurant in the UK, how you handle tips isn't just a matter of good practice anymore. It's the law. The Employment (Allocation of Tips) Act 2023 (commonly known as the Tipping Act) came into force on 1 October 2024, and it changes how every restaurant in England, Scotland, and Wales collects, records, and distributes tips. Whether your team earns tips through card payments, service charges, or cash pooling, you need a system that's fair, transparent, and well-documented.
The stakes are real. If you get it wrong, your staff can take you to an employment tribunal, with compensation of up to £5,000 per affected worker. Fair tip distribution also builds trust with the people who keep your restaurant running.
This guide breaks down exactly what the Tipping Act means for restaurant operators, what you need to do to meet its requirements, and how to set up systems that make the process manageable day to day.
What the Tipping Act means for your restaurant
The Tipping Act, formally the Employment (Allocation of Tips) Act 2023, came into force on 1 October 2024. It applies to every employer in England, Scotland, and Wales who has control or significant influence over how tips are distributed. According to the UK Government, the law is designed to protect roughly 2 million workers across hospitality businesses and other service sectors.
If your restaurant collects tips, service charges, or gratuities on behalf of staff, the Act requires you to pass on 100% of those tips to workers. You can't deduct card processing fees, admin costs, or any other charge before distributing them.
The Act is accompanied by a statutory Code of Practice that sets the minimum standard for fair and transparent distribution. This isn't optional guidance. Employment tribunals will use the Code when assessing whether your restaurant's tipping practices meet the legal standard.
For restaurant operators, the timing matters. According to Deputy's UK Big Shift Report 2025, UK hospitality employment grew by four per cent into 2025. That means more workers, more tips flowing through your business, and more people with the right to challenge how those tips are shared.
If you haven't already reviewed your tipping practices, now is the time. The law is live, and your staff know about it.
Which tips are covered (and which aren't)
Not every tip falls under the Act. The key test is whether you, as the employer, have "control or significant influence" over how the tip is distributed. In a typical restaurant, the rules apply like this.
Tips that are covered:
Card tips added to the bill or entered on a card machine
Voluntary or compulsory service charges collected by the restaurant
Cash tips that you collect and redistribute (through a pool, a tronc (a formal tip-distribution scheme), or any other system you manage)
Digital tips received through apps where the restaurant controls distribution
Non-monetary tips such as vouchers or tokens, if the employer manages them
Tips that are not covered:
Cash tips that individual workers keep directly, with no employer involvement at all
The distinction is straightforward. If a customer leaves a £5 note on the table and your server pockets it without the restaurant collecting, pooling, or redistributing it, that tip falls outside the Act. But the moment you tell staff how to share cash tips, pool them at the end of a shift, or run them through any kind of distribution system, the Act applies.
Acas guidance on the Tipping Act offers further detail on how the "control or significant influence" test works in practice. For a broader overview of what the UK tipping legislation means across the hospitality sector, Deputy's guide covers the full picture. If you're unsure where a specific arrangement sits, it's worth reviewing your setup against Acas guidance.
Your obligations as a restaurant employer
The Act sets out clear requirements for restaurant employers. These are the key obligations.
Pass on 100% of qualifying tips
You can't deduct card processing fees, admin costs, or any other charge from tips before distributing them. Those costs are the restaurant's responsibility.
Distribute tips promptly
Tips must reach your staff by the end of the month following the month they were received. So tips received in June must be paid out by the end of July at the latest.
Share tips fairly and transparently
The Code of Practice sets out what "fair" means. Your distribution approach should be justifiable based on clear criteria, and you need to be able to explain why each worker receives the share they do.
Create a written tipping policy
Every restaurant must have a written policy that explains:
How tips are collected
How they're distributed
The timeline for distribution
Who to contact with questions
This policy must be accessible to all staff, including agency workers.
Keep records for three years
You need to maintain records of total tips received and amounts distributed to each worker. Staff have the right to request and view these records, so your record-keeping needs to be accurate and up to date.
Include agency workers
If you use agency staff, they're entitled to a share of tips under the Act. The responsibility for paying tips to agency workers sits with the agency itself, but you must pass the relevant portion to the agency for distribution.
Remember: tips can't count towards the National Minimum Wage
This hasn't changed, but it's worth restating. Tips are separate from wages, and you can't use them to meet your National Minimum Wage obligations.
How to set up your tronc system
A tronc is a formal scheme for distributing tips and service charges, typically managed by a tronc operator (sometimes called a troncmaster). It's the most common method for handling tips in UK restaurants, and the Tipping Act hasn't removed it as an option. But the rules around how a tronc operates are now tighter.
Choose your tronc operator
Your tronc can be managed by:
An elected staff member (common in smaller restaurants)
An external accountant
A specialist tronc provider
The tronc operator handles the day-to-day distribution of tips and, in many cases, manages the tax treatment. HMRC guidance on tips and troncs covers the tax implications in detail. But here's the part that catches restaurant owners off guard: even if your tronc is run independently, you remain legally responsible for making sure distribution is fair.
Define your fairness criteria
The Code of Practice doesn't prescribe a single formula. Instead, it expects you to consider factors like:
Role type: front-of-house staff typically earn more tips directly, but kitchen and back-of-house teams contribute to the overall customer experience
Hours worked: a part-time team member working two shifts a week should receive a proportionate share
Seniority and responsibility: where relevant, and only if justified
Customer intent: if tips were left specifically for a named server, the Code acknowledges this can factor into distribution
The fairness criteria you choose should be documented in your written tipping policy and applied consistently.
Get the data right
Fair distribution depends on accurate data, especially hours worked. If your tronc operator is splitting tips based on hours, they need reliable records. Deputy's time and attendance tools track hours across your team, giving your tronc operator the data they need to calculate fair allocations. Deputy's TipHaus integration takes this further by connecting rota data directly to tip distribution workflows.
According to Deputy's UK Shift Pulse Report 2025, hospitality leads all sectors in positive worker sentiment at 78.37%. Fair, transparent tip distribution is one of the factors that supports this. When staff trust the system, they stay.
Handle multi-site operations carefully
If you operate multiple restaurant locations, tips earned at one site must stay at that site. You can't pool tips across locations. Each site needs its own tronc arrangement (or, at minimum, a clearly separated allocation within a shared system).
