Tips Act FAQ

The Employment (Allocation of Tips) Act 2023 started on 1 October 2024. It says employers must pass on all tips to workers, share them fairly, pay them by the end of the following month, have a written tipping policy and keep records for 3 years. There's also an official Code of Practice, which employment tribunals take into account.

In England, Scotland and Wales. Northern Ireland has its own employment law.

Card and digital tips, service charges (optional or compulsory), vouchers with a cash value, and cash tips that you collect, pool or tell staff how to share. Cash a customer gives straight to a worker who keeps it is covered only if you have a say in how cash tips handed to workers at that venue are shared that week or the week before. See Recording tips.

No. Workers must get the full amount the customer paid. The business pays the card fees.

No. 100% must go to workers. The only deductions allowed are income tax and National Insurance through payroll where the law requires them. You can't use tips to cover breakages, till shortages or admin costs.

No. Tips are paid on top of wages and never count towards the minimum wage.

No. Fair doesn't mean equal. You can use clear, objective factors, such as hours worked and the type of role. Fairpool uses hours × role weight. Whatever you use must be written in your policy and must not discriminate. See Adding workers and role weights.

The law doesn't list who must be included. It says you should think about everyone who helps provide service to customers, which often includes the kitchen. Decide who's included, explain why in your policy, and ask your team what they think.

Yes, if they work at the venue, help provide service and your policy includes them. The business and its owners can't keep any share.

No. Tips must be shared between the people who work at the place where they were paid. Fairpool keeps each venue's tips separate.

By the end of the month after the month the customer paid. A tip left on 23 June must be paid by 31 July. See Running an allocation and paying staff on time.

Put it right as soon as you can. A worker can bring a claim at an employment tribunal: usually within 12 months for how or when tips were shared or paid, and within 6 months for problems with your policy or records. A tribunal can order you to pay what's owed, and compensation of up to £5,366. Record any extra payment on the allocation: see Corrections, settlements and tribunal orders.

Yes, if customers tip more than occasionally. Each venue needs one, and every worker must be able to see it. See Your tipping policy.

No. Workers can see the total tips at the venue and their own share, but not anyone else's.

A tronc is a pot of tips shared out among staff. Some businesses appoint an independent troncmaster to run it, which can change whether National Insurance is due. You don't need one to follow the Tips Act. Fairpool currently assumes your business runs the allocation, and its template policy says so. If you already have an independent tronc, moving its allocation into Fairpool means your business decides the shares. HMRC treats that as the employer being involved, so National Insurance becomes due on tips that were free of it. Talk to your payroll adviser before you switch.

Tips paid through payroll are taxed as pay. Fairpool can't give tax advice: ask your accountant, or see HMRC's guidance E24.

Coming soon: Support for venues that use an independent troncmaster.