Call us today

Gratuities and tips – What the delay to the Employment (Allocation of Tips) Act 2023 means for you

Get in touch today - call Kent on 01634 570 390 or Surrey on 01737 370 493

Book a FREE consultation

If you would like to get some impartial advice, simply book a free consultation and we'll get in touch with you as soon as we can.

Gratuities and tips – What the delay to the Employment (Allocation of Tips) Act 2023 means for you

The Department of Business & Trade (DBT) has released the finalised draft of the Code of Practice on Fair & Transparent Distribution of Tips – the next step towards bringing the Employment (Allocation of Tips) Act 2023 (the Act) into force.

The Act will require businesses, where tips and gratuities are provided by customers, to pass on 100 per cent of these payments to staff through a fair distribution method, without withholding any amount to cover costs.

The long-awaited Code of Practice offers clarification on some key points within the legislation – most significantly, that requirements within the Act will be delayed until 1 October 2024.

This offers hospitality businesses an additional three months’ grace if they are implementing tronc management systems for the first time and make any further preparations required.

How to prepare

The requirements of the Act present two major areas in which business owners need to prepare to be fully compliant with regulations:

  • Implementing a tronc system
  • Cash flow planning to cover costs

From now until 1 October, we urge businesses to look at the solutions they have in place and identify areas where improvements could be made.

Troncs and troncmasters

Under the new legislation, hospitality business owners will be required to store and distribute tips and gratuities paid to staff through a tronc – the system that a business uses to pool and distribute tips.

As part of your compliance efforts, you will need to decide on how you will define ‘fair distribution’, as well as appoint a troncmaster who is responsible for distributing tips through the tronc system.

Cash flow planning

The most significant element of this legislation is that employers are no longer allowed to withhold a portion of tips paid by customers to cover costs, such as card payment charges or the cost of a tronc scheme.

If you have previously done this, you will now need to plan how to cover these costs through your existing cash flow.

For further guidance on the impacts of this new legislation, please contact a member of our team.


By clicking "Accept All Cookies", you agree to the storing of cookies on your device to enhance site navigation, analyse site usage, assist in our marketing efforts, and for personalised advertising.

More Information Accept All Cookies