New tipping rules: an explainer

Brooke Curtis


Premium Supplier 31st August 2023
Brooke Curtis


Premium Supplier

New tipping rules: an explainer

A new law on tipping has been going through parliament over the past few months. Informally called the 'tips bill', this new law will make it illegal to withhold any service charges from staff, and also means that businesses will be required to put in place methods to track tips and show that they are being shared fairly. 

The 'Employment (Allocation of Tips) Act 2023' got the go-ahead in May, which means it's likely that these new rules will come into play in early 2024. Here are the main things you should know and get ready for: 

1. Under the new legislation it will become unlawful for a business to hold back any tip or service charge and not pass it along to their employees, and 100% of qualifying tips must be given to staff. This includes any extra charges customers pay, whether it's by card or in cash. The only thing that can be taken out is tax. 

2. Tips must be distributed fairly to all workers, and agency staff must be treated the same as employed staff. What constitutes ‘fair’ will also likely be regulated, and it’s expected that a new ‘code of practice’ will accompany the bill to provide businesses with guidance on how tips should be distributed. 

3. Every business will need to have a clear, written tips policy that’s available for all employees to see. This policy should cover important details like how you'll be collecting and distributing tips, who's in charge of handling them, how they'll be split among workers, when and how often they'll be given out, and what happens when someone's on leave. 

4. You’ll also have to keep a record of all tips you get, including things like how much, when, who got them, and how they were divided. Staff can ask to see this info, so it’ll need to be accessible, and you’ll need to hold onto these records for three years from when the tip was paid. 

As this new law gets closer to becoming official, it's a good idea to plan ahead for any changes to how you handle tips and the extra time, and financial costs that might be associated with it, so you can make sure things go smoothly when the time comes.

You can read the full legislation at the Gov website, or find more information about how to write a tips policy on

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