New law on tips to generate £200m for hospitality workers

New law on tips to generate £200m for hospitality workers

After years of campaigning, trade unions and hospitality workers are set to benefit from a new tipping law that has been passed. The Employment (Allocations of Tips) Act 2023, which received Royal Assent in May 2023, will come into effect as of 2024 and is predicted to return £200m to the pockets of workers each year.

The new Allocation of Tips law aims to rectify the long-term issue of employers deducting service charges from tips and gratuities which has often left employees with less than what customers believe they are receiving.

This new legislation is expected to affect approximately 2 million workers in the UK working in pubs, cafes, and restaurants, for who tips make up a large portion of their take home pay.

UK Hospitality Chief Executive, Kate Nicholls, commented:

We’re pleased to support this new piece of legislation as it comes into law today and look forward to working with Government and other stakeholders on a code of practice that ensures a fair distribution of gratuities amongst all who contribute to providing great hospitality.

What will the Employment (Allocation of Tips) Bill 2023 cover?

The new legislation once in affect will include:

  • A requirement that means employers will have to pass 100% of tips to staff, with the only deductions coming from those required by tax law
  • A statutory Code of Practice on Tipping setting out the principles of fairness and transparency that employers must follow
  • A requirement that employers must have a mandatory written policy on tips and gratuities – including how to distribute them fairly and how to keep a record of how tips are distributed for three years from the date received
  • A right for employees to request information on their employer’s tipping record over a period during which they had worked for the employer within the last three years
  • Requirements for tips that are distributed via a tronc system to be paid no later than the end of the month following the month of which they were first paid by a customer
  • A right for agency employees to also benefit from the Allocation of Tips bill

About our expert

Simon Gilmour

Simon Gilmour

Head of Employment
Simon Gilmour is Head of Employment at Harper James. He joined the firm in April 2018 as a partner in the employment team. Having qualified as a solicitor in 1994, he has worked at top 50 law firms in the West Midlands for 25 years, 18 of which were as a partner and Head of Department.



What next?

Please leave us your details and we’ll contact you to discuss your situation and legal requirements. There’s no charge for your initial consultation, and no-obligation to instruct us. We aim to respond to all messages received within 24 hours.

Your data will only be used by Harper James Solicitors. We will never sell your data and promise to keep it secure. You can find further information in our Privacy Policy.

Our offices

A national law firm

A national law firm

Our commercial lawyers are based in or close to major cities across the UK, providing expert legal advice to clients both locally and nationally.

We mainly work remotely, so we can work with you wherever you are. But we can arrange face-to-face meeting at our offices or a location of your choosing.

Head Office

Floor 5, Cavendish House, 39-41 Waterloo Street, Birmingham, B2 5PP
Regional Spaces

Stirling House, Cambridge Innovation Park, Denny End Road, Waterbeach, Cambridge, CB25 9QE
13th Floor, Piccadilly Plaza, Manchester, M1 4BT
10 Fitzroy Square, London, W1T 5HP
Harwell Innovation Centre, 173 Curie Avenue, Harwell, Oxfordshire, OX11 0QG
1st Floor, Dearing House, 1 Young St, Sheffield, S1 4UP
White Building Studios, 1-4 Cumberland Place, Southampton, SO15 2NP
A national law firm

To access legal support from just £145 per hour arrange your no-obligation initial consultation to discuss your business requirements.

Make an enquiry