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The tipping law for restaurants: what you must do ​

Since 1 October 2024, the tips that pass through your business have had to reach your staff in full. The Employment (Allocation of Tips) Act 2023 and its statutory code of practice require employers to pass on tips, gratuities and service charges without deductions, share them fairly, pay them out on time, and run the whole thing under a written policy that staff can see. This guide sets out what that means for a restaurant, café, pub or takeaway, and what is changing next. The law covers England, Scotland and Wales.

Which tips are covered ​

The law covers “qualifying” tips: the ones your business receives, or whose sharing it controls or significantly influences. How the guest pays does not decide it.

  • Card tips, and tips paid by app or QR code that reach your business, are tips your business receives.
  • Cash tips are covered too if you tell staff how to share them, or collect them and share them out yourself, for example at the end of a shift or through payroll.
  • A cash tip that a member of staff receives and keeps, with no involvement from you, is outside the law. So is a tip a guest pays straight to a member of staff through an app that bypasses the business.
  • Service charges count as tips for this law, whether you add them automatically or leave them to the guest.

The law protects workers, including agency workers placed with you. It does not apply to self-employed people.

Pass on every tip, without deductions ​

All qualifying tips and service charges must go to workers without deductions, apart from very limited cases such as income tax. The code says this “does not affect the provisions around tax”: how tips are taxed is a separate question, covered in our guide to service charges and tips.

One part of a payment is not a tip under the law: the VAT. Where a service charge is compulsory and carries VAT, what has to be passed on is the amount after VAT (Employment Rights Act 1996, section 27C(7)).

Share them fairly ​

Fair does not have to mean equal. The code asks you to use a clear, objective set of factors and to give due consideration to everyone involved in serving guests, including agency workers. Its examples of factors are:

  • the type of role, such as front of house and kitchen;
  • basic pay;
  • hours worked while the tips were received;
  • individual or team performance;
  • seniority or level of responsibility;
  • length of service;
  • what the guest intended.

The factors must not discriminate, directly or indirectly, and they must be stated in your tipping policy. The code also asks you to consult staff to seek broad agreement that the system is fair, and to review it as your team changes.

You can hand the sharing to a tronc: a pool run by an independent operator, such as a member of staff, an outside payroll or accounting firm, or someone the staff elect. If the framework you set is fair and you reasonably believe the tronc runs independently and fairly, you are treated as complying with the code. If you later learn that it is not, you must act: change it, replace the operator, or end it.

Pay them out on time ​

Tips must reach staff by the end of the month after the month the guest paid them, at the latest. A tip left on 23 June must be paid out by 31 July.

Write a tipping policy ​

If your business receives tips more than occasionally, you need a written tipping policy. It should say how tips are accepted, how they are allocated and paid out, and what you do to keep the process fair and transparent.

  • Write it in plain language.
  • Give every member of staff the same access to it, including agency workers and people who join at short notice. Email, a staff portal or a printed copy all work.
  • Provide it in an accessible format to a worker with a disability who asks.

Keep the tipping record ​

You must keep a record of all qualifying tips received at each place of business and the amount allocated to each worker, for three years from the date each tip was paid.

A worker can ask in writing to see it, once every three months, for any period up to three years back in which they worked for you. Your answer must show the total tips received in that period and the worker’s own share, not anyone else’s. Keep and share the record in line with data protection law.

If a member of staff disagrees ​

The code asks both sides to try to settle a complaint between themselves first, and Acas can help with mediation. A worker, including an agency worker, can also take a claim to an employment tribunal. The tribunal can declare the complaint well founded, order you to revise an allocation, or order you to pay compensation, including to other staff at the same place of business who did not complain.

What is changing next ​

The Employment Rights Act 2025 adds three duties to the tipping law (section 14):

  • Consult before you write the first policy. Consult the representatives of a recognised trade union, or other elected or appointed staff representatives; where there are none, consult the staff likely to be affected directly.
  • Review the policy at least every three years, and consult the same way at every review.
  • Share an anonymised summary of the views expressed in each consultation with all staff at that place of business.

These duties were not yet in force when this guide was checked. The government consulted on a revised code of practice from 19 August to 29 September 2026 and had not published the outcome. Its plan is for a final code to go before Parliament, with the new duties expected to take effect in late 2026. Until then, the current code applies. If you already have a policy, it costs little to start now: a short staff survey and a one-page summary of what people said.

A short checklist ​

  • Every card, app and QR tip, and every service charge, reaches staff with no deductions other than tax.
  • Cash tips you collect or direct are shared under the same policy.
  • A written policy, in plain language, that every member of staff can see, including the factors you use to share tips.
  • Tips paid out by the end of the following month.
  • A record of tips received and each person’s share, kept for three years.
  • A date in the diary to consult staff and review the policy.

How this works in Yumee POS ​

Guests can add a tip on the PAX card machine when they pay, once you switch tipping on. Each card tip is recorded with its payment, and the day’s tip total shows on the X and Z reports and in the figures your accountant downloads. In the staff time app you can keep your written tipping policy, with the dates you last reviewed it and last consulted staff, and share a tip pot by hours worked, by role or equally. You enter the pot, the split is worked out for you and can be adjusted, and tip sharing stays off until you switch it on. How tips are shared remains your decision.

Sources ​

This guide is general information, not legal advice. For your own business, ask an employment adviser, Acas or a solicitor.