Tips and service charges: who keeps the money?

You took the order, worked the pass or washed the plates. The service charge is for the people who did that work, not a second income stream for the restaurant. In England, Scotland and Wales, your employer must allocate qualifying tips in full and fairly to workers. It cannot skim a card fee or keep a house percentage. If your share is missing, start with a written request for the policy and records. Save it somewhere you control.

If the money is not on your payslip

1. Save the evidence. Note dates, the service-charge percentage and what reached your payslip or tronc statement. Keep bills, statements and rotas you can lawfully access. Write down any manager’s explanation. Save copies somewhere you control.
2. Ask for the policy and records. Request completed months in writing. You can request records once in any three-month period; the reply is due within four weeks. Check the site’s total and the employer’s allocation to you, or the amount sent to an independent tronc. There is wording below.
3. Check the split. Compare your share with the policy’s factors, such as hours or role. Fair does not mean equal. A cut “for the card machine” is unlawful, whatever the policy says.
4. Get support. Ask your union rep to help with a grievance. Unite organises hospitality workers. Acas, Citizens Advice or a local law centre can advise. Explain any fear of lost shifts or an employer-linked visa. We recommend challenging a disputed pool with colleagues and a rep.
5. Protect the deadline. Notify Acas for early conciliation before the limit expires. Allocation and payment claims normally have twelve months minus a day; policy and records claims have a shorter limit, detailed below. A grievance does not pause either clock. If conciliation fails, use the certificate to bring an employment tribunal claim. Our time limits guide and calculator explain the Acas extension. Tell the adviser this is a tips claim.

What the law actually covers

The duties under the Employment (Allocation of Tips) Act 2023 and its statutory Code of Practice took effect on 1 October 2024 in England, Scotland and Wales. Scotland uses the same rules. The Act does not apply in Northern Ireland.

The employer must allocate the total qualifying tips, gratuities and service charges paid at, or attributable to, a place of business fairly between workers there. The total, not what remains after the company’s costs. A payment is covered if the employer receives it, or if you receive it and the employer exercises control or significant influence over its distribution. “All cash goes in the tin” is control.

On an £80 bill, a 12.5% service charge is £10. If the employer receives it, the allocation rules apply. For a tip paid directly to you, employer involvement matters as well as the payment method.

The deadline, and the cut that is never lawful

Tips must be paid by the end of the month after the customer paid. A tip on 23 June is due by 31 July. January 2026 tips are due by 28 February 2026. Saving them for the summer bonus is not an option.

Card fees and admin percentages are not permitted deductions. The Code allows a deduction in very limited cases, such as income tax. The card company’s charge is a cost of taking cards, like the electricity. It is not a reason to shrink the pot.

The house does not get a share. The company is not a worker.

Who is in the pool

Employees and other workers are covered, including zero-hours and casual staff. Your contract label does not let the employer ignore work you actually did. Zero-hours contracts are not an exit from the pool.

A “self-employed” label does not decide it. If the venue sets your shifts and you must do the work yourself, read employee, worker or self-employed before you accept that this law skips you.

For agency staff, the venue is treated as the employer for the split. Once it pays your share to the agency, the agency must pass it on with no unauthorised deduction. You must not lose out solely for being agency. A lower share for everyone in their first two weeks can be lawful. A dock because the invoice says “agency” cannot. See agency workers’ rights.

Fair does not mean equal. The policy must explain clear, objective allocation factors. These can include role, basic pay, hours, performance, seniority, length of service and the customer’s intention. A Saturday bartender and a Tuesday kitchen porter need not receive identical amounts. But kitchen staff should not disappear from consideration because front of house takes the orders. The split must also avoid unlawful discrimination. A manager’s status alone does not justify a larger share.

Tips belong to the pool at the relevant place of business. A chain cannot move a busy branch’s pot to a quiet one. Several bars on one holiday park may share a pool if they are one place of business. Sharing a brand is not enough.

Is the tronc legal?

A tronc is an arrangement for pooling and distributing tips. The troncmaster runs it. For an independent tronc under the tipping law, the operator might be a staff member chosen by workers or an outside payroll or accountancy firm.

Using a tronc does not let the employer wash its hands of an unfair split. If it learns that an independent tronc is operating unfairly, it must take appropriate action, such as instructing or replacing the operator, or ending the arrangement. An admin fee inside a tronc is still an unlawful admin fee. Ask who decides the allocations, what deductions are made and who pays the operator’s costs. Independence matters for tax too, but a tronc is not automatically exempt from National Insurance.

The policy, and how to get the records

A written policy is required unless qualifying tips are paid only occasionally and exceptionally. A service charge on every bill is not occasional. The policy must say whether tipping is encouraged or required, how the split works and what keeps it fair. Everyone at that place must be able to see it, including agency workers. The Code requires plain language and an accessible format on request. If regular tips are coming in, “we don’t have a policy” is a breach, not an answer.

The same occasional-and-exceptional exception applies to the statutory record-keeping duty. Where records are required, the employer must keep them for three years from the date the customer paid the tip. You can make one written request in any three-month period for completed consecutive months within the preceding three years, provided you worked there at some point in each month. The reply is due within four weeks of receipt.

Under section 27J, you can request the site’s total qualifying tips and the amount the employer allocated to you. If the employer arranged allocation through an independent tronc, the records instead cover the amount arranged for allocation to workers through that tronc. Ask the troncmaster for your individual breakdown as well. You do not have a right to colleagues’ individual shares. These duties began on 1 October 2024; do not assume they create a right to records from before the law started.

If you started in March 2024 and request records on 1 October 2026, ask for October 2024 to September 2026 under this scheme. You can also ask voluntarily for older records. If four weeks pass without the required reply, seek advice on the shorter policy/records deadline. Do not wait for a second request before contacting Acas.

What a fair share looks like in pounds

If January’s tips are still missing at the end of February, contact Acas well before 27 February 2027. That is a conservative starting deadline using 28 February 2026 as the failure date and twelve months minus a day, before any early-conciliation extension. Ask an adviser to confirm the failure date. A genuine series can run from the last failure, but do not rely on a later missing payment to rescue an earlier claim.

Tax, National Insurance, and the wage floor

Tips have been excluded from the minimum wage since 1 October 2009. They cannot drag the hourly rate up to the legal floor. If basic pay is short and tips make the payslip look legal, that is a minimum-wage breach as well. Report it to HMRC, and read National Minimum Wage: rates and rights. The report does not pause a tribunal deadline.

Tips are taxable, including cash you keep yourself. Employer-allocated tips normally attract employee and employer National Insurance as well as income tax. Voluntary tips allocated independently of the employer can be exempt from National Insurance, often through an independent tronc. HMRC’s E24 guidance makes an important distinction: mandatory service charges attract National Insurance regardless of who shares them out. A service charge added automatically can still be voluntary if the customer genuinely has no obligation to pay it.

If you keep direct cash or app tips without employer involvement, tell HMRC what you received through your personal tax account or Self Assessment return. Those direct tips normally carry no National Insurance, but being outside the tipping Act does not make them tax-free.

Claiming, and what you can actually get

The policy/records limit increased on 1 October 2026. Allocation already had a twelve-month limit. The transitional regulations preserve the old rules where the relevant date is before 1 October 2026. For a series of failures, that can be the last failure in the series. Get advice if a continuing failure or series straddles the change; do not assume the longer limit revives an expired complaint.

The £5,000 cap is compensation for the complainant’s financial loss, not an automatic payment or a replacement for an order to pay tips. An allocation claim can also produce a payment order benefiting workers who did not bring it. Tell the kitchen.

Agency staff can challenge the venue’s allocation, and can claim against an agency that fails to pass on tips already paid to it. A tribunal can extend time if it was not reasonably practicable to claim within the limit, but you should not plan on that. Acas early conciliation can adjust the deadline under section 207B; it does not simply restart the clock. A grievance does not extend it.

Northern Ireland

The Great Britain Act does not cover work in Belfast or Derry. The Department for the Economy’s Good Jobs proposals include passing tips to workers in full, but we are not treating that proposal as an enforceable right as at 1 October 2026. If your contract promises a share, seek advice about enforcing that existing entitlement. Contact the Labour Relations Agency rather than Acas, and read our Northern Ireland comparison. Do not use a Great Britain tips deadline for a Northern Ireland dispute.

What is in force, and what is only promised