A review of compliance with the Employment (Allocation of Tips) Act — which came into force in October 2024 — has found that adherence across the hospitality sector remains inconsistent six months on, with larger groups particularly likely to fall short of the legislation's requirements around transparency and documentation.
The review, carried out by a coalition of hospitality trade unions and industry bodies, drew on survey data from over 1,200 hospitality workers across restaurants, pubs, hotels and casual dining groups. It found that approximately 68% of respondents now have access to a written tipping policy from their employer, up from an estimated 30% before the legislation came into force. However, the remaining 32% — concentrated disproportionately within larger multi-site groups — report either no policy in place or one that has not been communicated to staff.
The legislation requires all qualifying tips to be passed to workers in full, prohibits employers from retaining service charges for business costs, and mandates a written tipping policy that must be accessible to all employees on request.
Where Compliance Is Falling Short
The review identified three areas where businesses are most frequently falling short. First, written tipping policies: many employers have updated their practice without documenting it formally, leaving them technically non-compliant even where the spirit of the legislation is being met. Second, record access: workers are legally entitled to request a breakdown of how tips have been allocated at their workplace, but fewer than 40% of respondents knew this right existed. Third, third-party tronc arrangements: several large groups appear to have restructured their tronc arrangements in ways that comply with the letter of the legislation while reducing the effective distribution to non-service staff.
"The intent of the legislation was to ensure transparency and fairness," said a spokesperson for one of the bodies involved in the review. "What we're seeing is that some operators — particularly larger ones with the legal resource to find technical compliance — have made changes that satisfy the minimum threshold without changing the culture."
HMRC and Enforcement
Enforcement of the tipping legislation sits primarily with employment tribunals rather than HMRC, which means compliance is largely complaint-driven. Workers who believe their employer is not meeting the requirements of the Act can raise a claim with an employment tribunal; there is no proactive inspection regime of the kind that operates for National Minimum Wage compliance.
Industry observers have noted that this enforcement structure creates a meaningful gap between what the legislation requires and what workers can practically obtain. Employment tribunal claims require an individual to be willing to take action against their employer, a step many are understandably reluctant to take while still employed.
The review's authors are calling for the government to introduce a proactive compliance inspection regime for tipping legislation, similar to the joint HMRC and BEIS naming scheme for NMW non-compliance.
What Compliant Businesses Should Have in Place
The legislation requires operators to maintain a written tipping policy covering how tips are collected and allocated, whether a tronc arrangement is in use and who administers it, and the timescale for distributing tips to workers. That policy must be made available to all employees on request and reviewed when material changes to the business's tipping arrangements occur.
Operators who are unsure whether their current policy meets the standard should seek advice from their payroll provider or employment law adviser before a complaint makes the question unavoidable.