Legislation to guarantee tips for hospitality workers

Feb 7, 2024

The Employment (Allocation of Tips) Bill is set to come into force on 1 July 2024.  The new legislation will place a legal obligation on employers to ensure that all tips, gratuity, and service charges are paid in full to workers, including eligible agency workers. 

This is expected to have a substantial impact on the income levels of approximately 2 million workers in the UK’s hospitality, leisure, and service sectors.

The Government has recently started consulting on a draft statutory Code of Practice that business are encouraged to follow to ensure compliance with the new legislation. 

What do the new rules require?

Fair and Transparent Allocation: Employers must ensure that they distribute tips, gratuities, and service charges fairly and transparently to their workers without deductions, except in very limited scenarios, such as deduction of income tax. The Code of Practice recommends employers consider various factors, including job roles, individual or team performance, and seniority when allocating tips. Employers should aim to have an objective and reasonable method for distributing tips that takes into account the specific circumstances of the business.

Timely Payment: Employers have a responsibility to pay tips to their workers within one month of the end of the month in which the tips were received.

Written Policy: Employers are required to have a written policy outlining how they allocate qualifying tips. This policy should be accessible to all workers, providing clear guidelines on the criteria and methods used for distributing tips.

Record Keeping: Employers must maintain comprehensive records of all qualifying tips distributed at their place of business. These records should detail the allocation and distribution of tips among workers. Crucially, workers have the right to request access to these records to help promote transparency and allow workers to verify that they’ve received their fair share of tips.

Enforcement: Workers will be able to take enforcement action through the Employment Tribunals in respect of any breaches of the new obligations, with the Tribunals having the power to do the following:

  • Make a public declaration of any failure to comply with the rules;
  • Make an order for the employer to revise previous allocations of tips;
  • Make recommendations on previous allocations of tips; and
  • Order employers to pay compensation to workers.

What’s next?

Consultation on the Code of Practice is due to end on 22 February 2024, following which it’s expected the Government will publish a final Code of Practice. Further non-statutory guidance is also expected soon. 

Employers in the hospitality sector should be assessing their existing procedures for managing tips, gratuities and service charges to ensure they align with the new legislation.  Once published, businesses should review the final Code of Practice and any additional guidance to ensure their compliance.

This continues to be a complex and evolving area of law with a further raft of regulation expected in early 2024. If you need further advice on any points from this article, please contact us to speak to a member of our Employment Team.


This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

Tom Hyatt

Tom Hyatt

Solicitor, Employment Law

t: 0118 989 8153
e: tom.hyatt@herrington-carmichael.com

Latest News & Insights

All in a Day’s Work: Employment Podcast Series

Our Employment team bring you a monthly podcast covering all aspects of Employment law for businesses and individuals. You can browse our podcasts below…

Top Legal Insights


Contract Law

Material Breach of Contract

What is a ‘material’ breach of contract by a party to a commercial contract? This is a critical issue regularly considered by the courts. What constitutes a material breach and what are the remedies?

Property Law

Commercial Lease: The Financial impact on Landlord and Tenant

Coronavirus (COVID-19) and the restrictions now in place to control its spread, are having a significant effect on many business sectors.

Divorce and Family Law

Divorce in Lockdown: Can I get some discreet legal advice?

We have spoken to clients who are unfortunately experiencing some family issues, and would like to obtain expert legal advice, yet don’t know how...

Land & Property Dispute

Restrictive Covenants – The Price of Modification

Having identified that your land is burdened by a restrictive covenant and for the purposes of this article the covenant in question will be that only one residential building can be erected on the land. What do you do next?

Wills, Trusts and Probate

Why is having a will so important?

It is entirely up to you if and when you want to create a Will, but it is important to be aware of the consequences of not having a Will.

Award winning legal advice

Herrington Carmichael offers legal advice to UK and International businesses as well as individuals and families. Rated as a ‘Leading Firm 2024’ by the legal directory Legal 500 and listed in The Times ‘Best Law Firms 2023 & 2024’. Herrington Carmichael has offices in London, Farnborough, Reading, and Ascot.

+44 (0)1276 686 222

Email: info@herrington-carmichael.com

Brennan House, Farnborough Aerospace Centre Business Park, Farnborough, GU14 6XR

Reading (Appointment only)
The Abbey, Abbey Gardens, Abbey Street, Reading RG1 3BA

Ascot (Appointment only)
102, Berkshire House, 39-51 High Street, Ascot, Berkshire SL5 7HY

London (Appointment only)
60 St Martins Lane, Covent Garden, London WC2N 4JS

Privacy Policy   |   Legal Notices, T&Cs, Complaints Resolution   |   Cookies  |   Client Feedback   |  Diversity Data



Our Services

Corporate Lawyers
Commercial Lawyers
Commercial Property Lawyers
Conveyancing Solicitors
Dispute Resolution Lawyers
Divorce & Family Lawyers
Employment Lawyers
Immigration Law Services
Private Wealth & Inheritance Lawyers
Startups & New Business Lawyers

Pay Online >

Please be aware that we have no plans to change our bank details. If you receive any indication that any of our bank details have changed please contact us before sending us any funds. We take no responsibility for monies you transfer into the wrong bank account.

© 2024 Herrington Carmichael LLP. Registered in England and Wales company number OC322293.

Herrington Carmichael LLP is authorised and regulated by the Solicitors Regulation Authority with registration number 446245.