Final destination on the route to full tipping

Hospitality workers must receive all gratuities and service charges without deductions in future

Hospitality and other service sector businesses need to gear up for gratuity changes, with new legislation designed to tie up loose strings over tipping protocols, to ensure all tips and service charges are handed over to staff.

The long-awaited legislation, drawing on recommendations from the Government’s Good Work Plan proposals, will make it unlawful for employers to withhold tips and service charges from staff, and give workers new rights to see an employer’s tipping record.  The new rules will come into force after winning backing from MPs and a new statutory code of practice is set to be developed, to provide businesses and staff with advice on how tips should be distributed.

A wider employment bill was intended to incorporate these changes, but when the bill was subject to ongoing delays, MP Dean Russell put forward a private members’ bill to tackle the issue. The government, which formally backed the Employment (Allocation of Tips) Bill at its second reading in parliament, said it should benefit more than 2 million workers.

The new rules are designed to overcome situations where employers make deductions from tips or withhold service charges, with many so-called ‘administration’ charges levied where tips are given through card payments.
The change is finally in sight and employers operating a business with gratuities and tipping involved should get on board with matching up to the new rules.

Whether tips are paid through a set percentage service charge or added at the discretion of the customer in cash or card payments, historically there has been no control over how tipping in the workplace is managed, just a voluntary code of practice which encourages employers to be transparent.

The only restriction there has been on employers is that tips cannot count towards the national minimum wage (NMW).  The NMW Regulations apply to any eligible worker, whether they are paid by the hour or on some other basis, and calculations must be made to check if the equivalent hourly rate is at the right amount and any gratuities paid at work must be on top of the NMW.

Also, some restaurants may have what is known as a tronc scheme.  This is effectively a self-administered scheme for staff, with a troncmaster appointed to distribute tips between staff.  The employer is not able to influence the operation of the scheme or how tips are shared.

While this legislation may be controversial to some employers, this is now the final call for ensuring staff are receiving their full fair share of tips received.  The move towards cashless transactions has been a further barrier to workers who want to see how much has been given in tips and this will help tackle that issue with greater transparency in future.

One aspect that employers need to face up to is the handling of tips when customers add it on to their card payment.  In the past, many businesses have made a deduction for the related transaction fees applied on card payments, before passing the cash on to workers, but this will no longer be permitted.  In future, the whole sum must be passed on.

To discuss this, or any other related matter, please contact Jane directly on 01483 887766, email or start a live chat today.

*This is not legal advice; it is intended to provide information of general interest about current legal issues.


Jane Crosby

Partner, Head of Dispute Resolution & Accredited Mediator

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises...

Jane Crosby -Head of Dispute Resolution

Partner, Head of Dispute Resolution & Accredited Mediator

Jane Crosby

Jane is a Partner based in the Guildford office and she is also Head of the Dispute Resolution team here at Hart Brown. Jane specialises in employment Law and commercial litigation and brings more than 15 years' experience to her role.

Prior to entering the legal profession, Jane was employed in the aviation industry. This experience is appreciated by many of Jane's clients who note that she is able to take a commercial and pragmatic approach to any legal issue that they face.

Jane acts for a wide range of individuals and businesses and her areas of specialism include aviation, property related industries and IT. Jane regularly advises on aspects of employment law, such as settlement agreements, employment contracts, policies and procedures, redundancies, equal pay, data protection, issues arising from TUPE and reorganisations, the calculation of holiday pay, bonus and commission payments, disciplinary and grievance issues, dismissal and termination issues, the protection of confidential information and the enforcement of restrictive covenants. Jane gets involved in GDPR training for her clients and she is able to deliver tailored employment law training sessions upon request.

As a commercial litigation lawyer, Jane also deals in shareholder and directors disputes, commercial contract disputes and the enforcement of restrictive covenants.

Jane has been involved in successful high value commercial litigation for clients in the High Courts, she is an accredited mediator and she is a member of the Employment Lawyers Association.

Jane is often asked to write for a number of well known publications, including The Daily Mail, The Telegraph and The Week and she has been interviewed on BBC Radio 4.

Here is small selection of the feedback that Jane has received:

“Jane, I cannot sincerely thank you enough for your wise counsel and am delighted to have made your acquaintance. If I am blessed with a new position somewhere I will hand over my contract in the first instance to you. Likewise, any of my friends, peers, romans and countrymen wanting advice, I will point them in your direction.”

“Jane, you have been most resilient on my behalf for which I sincerely thank you for all your endeavours. I have a tremendous working relationship with Hart Brown and you have undoubtedly compounded this further."

“I appreciated the clarity of advice given at a stressful time”.

“A sensitive and highly professional approach and efficient work in the interests of the client”.

“Your advice, conduct and assistance have been indeed outstanding and very professional but also – and most importantly – very humane”.