Fair Allocation of Tips Policy

On 1 October 2024, the Employment (Allocation of Tips) Act 2023 came into force. Under the Act, employers have a duty to ensure that all qualifying tips, gratuities and service charges are allocated and distributed fairly between workers.

Employers are required to have a written tips policy in place where tips are paid on more than an occasional and exceptional basis and to make this available to its workers. The policy must set out certain information, including how it determines the allocation and distribution of tips, gratuities and service charges

This Fair Allocation of Tips Policy includes the following sections:

• Introduction
• Payment of Tips by Customers
• Collection and Allocation of Tips
• Payment of Tips
• Record keeping and data protection
• Requests to view tipping record
• Policy review
• Resolving issues

If employers are not required to have a policy in place, they must inform workers of this fact and the reasons why.

The Tips Act places weight on the employer’s duty to be transparent when it comes to tips and how they are allocated and distributed. To ensure transparency, the Code of Practice states that employers will be required to consult with workers to seek a broad agreement that the allocation of tips is fair, reasonable and clear. 

Two letters are available to facilitate the consultation process. The Letter Seeking Agreement to Allocation of Tips Policy should be sent to affected workers to seek their agreement to the Company’s tip allocation policy. The Letter Confirming Allocation of Tips Policy should be used to confirm the Company’s policy on the fair allocation of tips when staff feedback on the draft policy has been considered.  

Fair Allocation of Tips Policy is part of Employment Documents. Just £35.00 + VAT provides unlimited downloads from Employment Documents for 1 year.