Twelve months on, has the UK Tipping Law been successful?

In 2016, a government report concluded that 100% of tips in restaurants, hotels and bars should go to workers, not their employers. This signalled the start of a drawn-out process that should have put the matter to rest when the UK Tipping Law came into force on 1 October 2024.

The Employment (Allocation of Tips) Act 2023 requires employers to pass on all discretionary tips and service charges to workers without deductions, except tax. Employers must also have a written tipping policy and maintain records to ensure the fair and transparent distribution of tips, which applies to both cash and card payments.

Workers can bring a claim to an Employment Tribunal if they believe an employer is not complying with the law. In these circumstances, employers face the potential of a £5,000 fine for non-compliance for each employee affected.

For the thousands of UK employers to whom the Tipping Law now applies, compliance has brought a series of practical challenges. Smaller businesses, in particular, may still be feeling the strain of keeping systems, records and policies compliant, while larger chains face the challenge of ensuring consistency across multiple sites. For many employers, the law has therefore become not just a compliance issue but also a test of how to balance legal obligations with the realities of day-to-day operations.

But, 12 months on from the Act coming into force, how successful has it been, and is the new regime reflected in the way consumers view how hospitality venues treat their staff?

Lifting the lid

Industry research published by URocked on the one-year anniversary of the Act becoming law has revealed that tipping in the UK remains a source of controversy. While the new law set out to add much-needed clarity and fairness to the process, whether it has fully succeeded remains open to question.

In particular, the findings indicate a persistent trust gap among diners, uneven implementation by operators and mixed outcomes for staff. Among the most significant insights are that more than half (54%) of consumers do not trust that tips reach workers in full – a damaging finding for the industry’s overall reputation. The situation also risks depressing tipping volumes at a time when many workers rely on them as part of their income.

From the employee perspective, only one in five staff members reports receiving more tips, while nearly one in four reports receiving fewer, and a quarter of staff say they have not noticed any change in how their employer handles tips. These are significant issues, given the fact that 65% of surveyed staff rely on tips/service charge income to some degree. Even so, most workers say the law has made things fairer, and six in ten believe customers would tip more if they had a better understanding of the requirements now placed on employers.

For employers, knowledge of the law remains a limiting factor, with just over half of decision-makers correctly describing the 100 per cent pass-through rule, and one in seven staff members stating that their employer is not complying. This situation goes some way to explaining the uneven implementation levels and mixed staff experiences, with employers incorrectly citing receipt-based “flexibility” and their right to make deductions as elements of the law.

Irrespective of how this misunderstanding has come about, each of these issues creates a potential compliance risk and contributes to the current low levels of customer trust at the point of payment.

What next for tipping in the UK?

Given that many staff members rely on tips as part of their income, progress now hinges on the practical execution, clear communication at the point of payment, and systems that make 100 per cent pass-through visible and auditable. Clearly, if all employees across the industry are to receive 100% of the tips and service charges paid by customers, there remain some serious issues to address.

While nearly nine out of 10 respondents say the new law has made things fairer for staff, our research shows there’s still work to be done to build consumer trust and ensure universal employer compliance. Too many businesses are either unclear about the rules or have failed to make the required changes, leaving both staff and customers questioning whether tips are being handled fairly. Transparency and education are now key to improving confidence across the sector.

Looking ahead, however, with clearer guidance, visible transparency and reliable technologies designed to support the fair distribution of tips, the sector can rebuild confidence and deliver on the law’s objectives for staff and customers alike.