Tips and service charges since October 2024 : calculate what you are owed

• From 1 October 2024, employers must pass on qualifying tips, gratuities and service charges to workers without unauthorised deductions (income tax is a limited exception).
• Tips must be allocated fairly and transparently. Employers who receive tips more than occasionally must keep a written tipping policy and tipping records (generally for three years).
• Qualifying tips must usually be distributed by the end of the month following the month the customer paid (example in the code: tip on 23 June must be paid by 31 July).
• Agency workers are covered. The hirer at the place of business must allocate fairly; the agency must pass tips on without unauthorised deductions.
• Tips do not count towards National Minimum Wage / National Living Wage. From April 2026, age 21+ is £12.71 an hour for work pay alone.
• If tips are missing or unfairly shared, raise it in writing, use grievance processes, then Acas and, if needed, an employment tribunal. Most claims still use 3 months minus 1 day; from 1 October 2026 most become 6 months minus 1 day if the clock starts on or after that date.

The Act (Royal Assent 2 May 2023; key duties from 1 October 2024) amends the Employment Rights Act 1996. The statutory code applies in England, Scotland and Wales. In short, employers must:

• pass on qualifying tips and service charges to workers without deductions, except in very limited cases such as income tax
• distribute fairly and transparently when they control or significantly influence distribution
• have regard to the code when designing tipping practices
• maintain a written tipping policy (unless tips are only occasional and exceptional) and make it available to workers
• keep records of tips received and amounts allocated to each worker

"Tips" in the code includes tips, gratuities and service charges (automatic or voluntary). Payment method does not decide whether a tip is qualifying: card, cash, app or QR can all count if the employer receives the money or controls how it is shared.

Qualifying vs out of scope

Usually qualifying when the employer receives the tip or exercises control or significant influence over distribution. Card tips into the business account, pooled cash collected and shared by management, and many electronic tips routed through the employer are classic examples. Non-monetary items with a fixed exchangeable value (for example certain casino chips) can also qualify if employer-controlled.

Usually out of scope when a worker receives and keeps a cash tip with no employer control or involvement, or when a customer tips a worker directly via an app that fully bypasses the employer. Those amounts may still be taxable for the worker, but they sit outside the Act's pass-on duties.

Self-employed people are outside the worker protections. Workers (including many zero-hours staff) are in.

Fair does not always mean identical shares. The code lets employers use clear, objective factors such as role (front of house vs kitchen), hours worked in the tip period, performance, seniority, length of service, basic pay structure, and customer intention. What they must avoid is unlawful discrimination, including indirect discrimination when a factor hits a protected group harder.

Employers should consult workers so the system feels fair and is understood. Factors used must appear in the written tipping policy. A tronc (pooling arrangement) is allowed if it operates fairly. If an independent troncmaster is appointed, the employer still needs a reasonable belief that the scheme is independent and fair, and must act if it later learns the tronc is unfair.

GBP example: A restaurant takes £2,400 in qualifying card tips and voluntary service charge in June. Policy splits 70% front of house / 30% kitchen by hours worked that month. Front-of-house hours total 600; kitchen hours total 200. Front-of-house pot: £1,680 (70%). A waiter who worked 60 of those 600 hours gets 60/600 × £1,680 = £168 before tax handling. Kitchen pot: £720. A chef on 40 of 200 kitchen hours gets 40/200 × £720 = £144. Those amounts should reach workers by 31 July at the latest under the code's timing example.

When tips must be paid

Employers must ensure tips are distributed to staff at the latest by the end of the month following the month in which customers paid. Tip on 23 June: distribute by 31 July. Holding tip money for "the next quarter" breaches that duty.

Written tipping policy

If qualifying tips arise more than occasionally and exceptionally, the employer must have a written policy covering how tips are accepted, how they are allocated and distributed, and what steps ensure fairness and transparency. All workers (including agency staff) should have equal access, in plain language, with accessible formats on request. A clothing shop that receives tips a few times a year may not need a written policy; a busy pub almost certainly does.

Records and your right to see them

Employers must keep a tipping record of qualifying tips received at the place of business and amounts allocated to each worker, for three years from the date the tip was paid. You can make a written request (usually one request per worker every three months) to see the record for a period of up to three years while you worked there. You get the total qualifying tips for the place of business in that period and the amount allocated to you, not other individuals' personal figures.

The Act and code expressly cover eligible agency workers. Principles of fairness apply whether staff are permanent, directly hired, agency, or zero-hours at the same site. After the hirer pays tips to the agency, the agency must pass them on without unauthorised deductions. Agency workers should get the tipping policy (from the hirer or via the agency) and equal weight if they query shortfalls.

HMRC guidance is long-standing and the Tips Act does not rewrite it: for pay reference periods from 1 October 2009, amounts representing tips, gratuities, service charges or cover charges do not count towards National Minimum Wage pay. From 1 April 2026, workers aged 21+ must receive at least £12.71 an hour for NMW purposes from wages for work, not from a tip top-up (GOV.UK NMW rates).

GBP example: You are 24 and work 30 hours. NMW floor: 30 × £12.71 = £381.30. Your employer pays £350 wages plus £40 tips. The tips do not rescue the shortfall. Wages alone are £31.30 below the legal minimum for that week, even though £350 + £40 = £390 on paper.

Tax and National Insurance treatment of tips (employer-received vs worker-kept cash, troncs, mandatory service charges) follows HMRC's separate E24-style guidance. The fairness duty and the tax rules are related but not identical: pass-on under the Tips Act does not mean "tips can fill the NMW gap".

1. Read the tipping policy and compare it with your payslips and any tip sheets.
2. Request the tipping record in writing for the months you dispute (respect the one-request-per-three-months rhythm).
3. Raise the shortfall with your employer in writing. Agency workers should chase both hirer and agency if money stopped mid-chain.
4. Use the workplace grievance process. The Acas Code of Practice on disciplinary and grievance procedures still matters.
5. Contact Acas for advice or Early Conciliation if you may claim.
6. An employment tribunal can hear complaints about fair allocation, the written policy, or tipping records. Remedies can include a declaration, an order to revise allocations, recommendations, or compensation (including for other workers at the same place of business in some cases). Judges must take the statutory tipping code into account where relevant.

Tribunal time limits: For most related claims today (September 2026), act within 3 months minus 1 day. From 1 October 2026, most claims become 6 months minus 1 day if your time limit starts on or after that date (Acas tribunal time limits). Do not wait for an internal process to finish before protecting the deadline.

• "We keep 10% for card fees / breakage." Unauthorised deductions from qualifying tips are tightly limited. Income tax handling is the usual lawful exception the code flags, not a general house cut.
• "Tips bring you up to minimum wage." Illegal for NMW maths since 2009. Work pay must meet £12.71 (21+, from April 2026) on its own.
• "Agency staff are not in the tronc." The code expects fair consideration of everyone involved in service at the place of business, including agency workers.
• "Cash tips are always outside the Act." Only if the worker keeps them with no employer control. If management pools and shares cash, they are likely qualifying.
• "We will pay tips next quarter." Too late if that misses the end of the month after receipt.
• No written policy in a tip-heavy venue, or a policy nobody can access.

Disputes often mix basic pay and tip shares on one messy payslip. Separate the two: check that wages alone meet National Minimum Wage, then check that qualifying tips arrived on time and match the policy. Paye Mes Heures helps you log hours and pay lines so shortfalls are easier to spot before you escalate to Acas.

• https://www.gov.uk/government/publications/distributing-tips-fairly-statutory-code-of-practice/code-of-practice-on-fair-and-transparent-distribution-of-tips-html-version
• https://www.gov.uk/government/publications/e24-tips-gratuities-service-charges-and-troncs/guidance-on-tips-gratuities-service-charges-and-troncs
• https://www.legislation.gov.uk/ukpga/2023/13/contents
• https://www.gov.uk/national-minimum-wage-rates
• https://www.acas.org.uk/employment-tribunal-time-limits
• https://www.acas.org.uk/disciplinary-and-grievance-procedures