Glossary · UK
What is Tipping Legislation (Employment (Allocation of Tips) Act 2023)?
UK law in force from 1 October 2024 requiring employers to pass all qualifying tips to workers in full, with a written policy and 3-year record-keeping obligation.
Full Definition
The Employment (Allocation of Tips) Act 2023 came into force on 1 October 2024, fundamentally changing how employers in the UK must handle tips, gratuities and service charges. Under the Act, employers are required to pass 100% of all qualifying tips received to their workers, without making any deductions (except those required by law such as PAYE income tax and National Insurance contributions). This means employers can no longer retain a portion of tips to cover credit card processing fees or administration costs. The Act covers tips paid directly to the employer by customers (whether in cash, by card, or via app) as well as discretionary service charges added to bills. It applies across all sectors where tipping is common, including hospitality, beauty and transport. Employers must have a written tipping policy explaining how tips are allocated and distributed among workers, and must make this policy available to all workers on request. Employers must also keep records of all qualifying tips received and how they were allocated for at least three years. Workers have the right to request information about their employer's tipping record and can bring a claim to an employment tribunal if they believe tips have not been passed on correctly or the policy has not been followed. HMRC continues to collect income tax and NI on tips received through the employer via PAYE in the normal way.