Guidance

Distributing tips fairly: non-statutory guidance for employers

Published 27 September 2024

Applies to England, Scotland and Wales

Agency workers

Employers are obliged to take into account agency workers when considering the distribution of tips. When tips are distributed to agency workers, this may be processed through a regular payroll cycle, or through separate payments of tips made via the employment agency or directly to the worker.

This does not necessarily mean that agency workers should always receive an equal (or any particular) share of the tips, as what is fair varies depending on the specific circumstances of the industry and employer. But it is intended that agency workers are not unduly disadvantaged solely by virtue of being engaged through an agency.

Example

Ryan works at a bar, engaged through an employment agency. Due to the way he is engaged, the bar does not consider him in the distribution of tips. This is likely to be found by a tribunal to be failing to comply with the requirements of the legislation, as it appears to constitute unfair treatment towards agency workers.

Example

Tony works a single shift at a bar, engaged through an employment agency. The bar has a probation policy, applying to all staff, that workers receive a lower share of tips in their first two weeks, and therefore Tony receives a smaller percentage than the more experienced, directly employed colleagues he works alongside in his shift. This is likely to be found by a tribunal to be complying with the requirements of the legislation, as it represents equal treatment for agency and directly engaged workers.

Multiple sites of operation

The law sets out that tips must be distributed between workers at the place of business where the tips are received. This means that employers cannot pool the tips received across multiple sites of operation, or different branches.

Example

Amrit is a bartender in a quiet seaside branch of a pub chain. All tips are pooled from the busier city centre branch of the same chain and divided between the workers in both pubs. As this would count as multiple sites of operation, this would not be permitted.

Example

Lucy is a worker in a holiday camp. Lucy and her colleagues work across a number of bars and food service locations all within the holiday camp. Tips collected across all the drink and food service locations are pooled, and distributed equally amongst all staff. As this would count as a single site of operation, this would likely be permitted.

Scope of workers

The code of practice makes clear that all workers involved in directly providing service to customers should be considered in the distribution of tips. The application of this principle varies depending on the specific circumstances of the industry and employer, and the employer must determine which jobs should be included, and justify this in their policy.

Examples

John is employed as a door porter in a fine dining restaurant. The employer has a tipping policy which includes a breakdown of which roles are determined to be part of the service to customers, and therefore eligible to receive a share of tips, which includes door porters. This would likely be permitted.

Jessica is employed as a marketing manager for a group of restaurants. Jessica usually works in an office within one of the sites but does not interact with customers during service. It would likely not be permitted for Jessica to receive a share of tips collected by the restaurants, as she is not directly providing service to customers.

Templates

Tipping policy template

This policy sets out the approach of [employer name] to tips, gratuities and service charges.

It has been developed following consultation with workers, and is reviewed on an annual basis.

[Employer name] encourages customers to leave tips.

[Employer name] applies an automatic service charge of 12.5% to tables of 8 people or more.

All cash tips are the property of the workers who receive them from customers, and it is up to those workers to decide how they are managed.

[Employer name] ensures that 100% of tips received via card payment are distributed to workers.

For each day, tips are divided equally between front of house staff and back of house staff.

Requesting tipping record template

Dear [name of employer]

I am writing to request access to my tipping record for the period March to May 2024.

This record should detail the total amount of qualifying tips, gratuities and service charges received by the business during this period, and the total amount paid to me.

Kind regards

[Name of worker]

Tipping record template

This information must be maintained by the employer for 3 years and issued to a worker upon their written request.

In January 2024, [Employer name] received a total of £2,500.00 in qualifying tips, gratuities and service charges, via card payment.

There are 25 eligible employees, and [name of worker] received a 1/25 share of £100.00. This was paid to them on 27 February, as part of February payroll.

All cash tips are retained by the workers who directly receive them from customers.

Addressing problems

Where disputes arise, efforts should first be made to reach a resolution, internally or externally.

Acas is an independent statutory body which offers impartial advice to employers, employees and their representatives on employment rights and obligations. It has expertise in helping parties to maintain good employment relations and resolving disputes where they arise. Acas may be contacted for advice by any party at any time.

Acas provides guidance about how to raise a problem at work and how to raise a grievance at work. If these efforts fail, the requirements on tipping can be enforced through the employment tribunal system. Acas provides guidance about how to make a claim to an employment tribunal.

Employment tribunals and tipping

Failure of distribution

If the complaint is based on a failure to comply with the requirements surrounding how and when tips are distributed, it must be presented within either:

• twelve months of the failure to comply
• twelve months of the most recent failure to comply (in the event of multiple failures)

However, an employment tribunal may consider a complaint later than this if it satisfied it was not reasonably practicable for the complaint to be presented within twelve months.

Additionally, the time required to consult Acas for the purposes of conciliation does not count towards the twelve-month limit. This is longer than the usual time limit for claims to the employment tribunal.

If an employment tribunal finds a complaint of this nature is well founded, it must make a declaration to that effect. It will also be empowered to order the employer to either:

• revise a previous allocation
• make a non-binding recommendation on a previous allocation
• order the employer to pay a worker or workers, which can include other workers who have not made a complaint to the tribunal

The tribunal may also award compensation of up to £5,000 per worker to compensate for financial loss.

Failure of information

If the complaint is based on a failure to comply with the requirements surrounding the written tipping policy and tipping records, it must be presented within either:

• 3 months of the failure to comply
• 3 months of the most recent failure to comply (in the event of multiple failures)

However, an employment tribunal may consider a complaint later than this if it satisfied it was not reasonably practicable for the complaint to be presented within 3 months. Additionally, the time required to consult Acas for the purposes of conciliation does not count towards the 3-month limit. This is in line with the usual time limit for claims to the employment tribunal.

If an employment tribunal finds a complaint of this nature is well founded, it must make a declaration that that effect. It will also be empowered to order the employer to comply with the relevant requirements.

The tribunal may also award compensation of up to £5,000 to the worker to compensate for financial loss.