Here at CPL Learning, keeping businesses compliant and confident is what we do best. With the tipping legislation now live, we’re taking a stance to make sure operators and their teams understand exactly what’s changed and what to do next to keep things fair, transparent and legal.
How does the legislation define tips and gratuities?
Firstly, let’s establish what is defined as tips and gratuities as per the legislation.
The Tipping Act now distinguishes between tips collected digitally, directly from customers to staff, and those that pass through the employer's hands. Tips collected digitally, straight to the staff, fall outside the scope of employer-received tips, provided these platforms operate correctly and adhere to HMRC guidance.
On the other hand, employer-received tips include those processed by the employer, such as tips made via card payment to the business. Worker-received tips are straightforward – they're the ones that go directly to the staff member, like handing a cash tip to a waiter.
What does the law require?
Under the Employment (Allocation of Tips) Act and the 2025 Statutory Code of Practice on Fair and Transparent Distribution of Tips, businesses must:
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Pass on 100% of tips to staff, with no deductions other than lawful ones (such as PAYE tax or, if applicable, NICs).
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Distribute tips promptly, no later than the end of the month following when the customer left the tip.
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Maintain clear records of all tips collected and distributed for at least three years.
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Allow staff to request tip records up to once every three months.
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Publish a fair and transparent tipping policy that reflects how tips are collected, distributed and managed.
Importantly, the Act also gives employees the right to take cases to an employment tribunal if tips are withheld or distributed unfairly.
Top tips for staying compliant with the Tipping Act
Here’s our refreshed nine-point checklist, developed with insight from leading hospitality and employment-law specialists.
1. Establish clear policies and procedures.
Your teams might need help understanding the new legislation and what it means for them. Being as transparent as possible about your tipping policies and procedures and making them easily accessible will help your teams feel confident in exercising their rights.
2. Check current processes.
Now’s the time to look at your current processes, looking closely at your HR and payroll systems to ensure your processes are compliant with the new legislation and that you have everything in place for reporting requirements.
3. Create a fair tipping policy.
If your current tipping policy isn’t fit for purpose, start developing a new fair tipping policy for your operation. Thinking about whether you want to set up a tronc system and whether you want to manage that internally or with the support of software or an external troncmaster.
The code strongly advises employers to work with their teams in developing tipping policies that align with what their teams consider “fair”. In addition, you’ll want to ensure fairness and equality within your policy, as the legislation will offer strengthened provisions to prevent any discrimination in the distribution of tips.
4. Talk to relevant third parties.
If you regularly contract in agency staff, engage in open communication with external agencies to establish fair tipping practices for agency workers.
The latest update to the legislation clarifies that businesses hiring agency workers will be regarded as the business that hires the agency workers in regard to tip allocation. If tips are passed to agencies for payment to workers, the agency retains the obligation to ensure no deductions (aside from income tax) are taken from tips.
5. Appoint a troncmaster.
When choosing between internal and external troncmasters, consider the pros and cons of each. External troncmasters offer expert guidance, flexibility and administrative relief, but at a cost. Internal troncmasters may save costs but require significant administrative oversight. Ultimately, you’ll need to decide based on your business’s needs and resources.
6. Get ready for reporting.
Under the new tipping legislation, operators will have reporting and transparency requirements they must adhere to. Your employees will have the right to request tip information, which will mean businesses must maintain records of tips collected and distributed as well as define how long they should keep the records.
7. Look at your current software.
If you currently use payroll or scheduling software, there may be tools and features that can help you manage your tipping policies.
For example, platforms such as Rotaready Evo, that integrate with TiPJAR, allow operators to automate tronc distribution directly from approved hours reducing admin, improving accuracy and helping businesses stay compliant with the Allocation of Tips Act.
8. Review holiday payment practices.
Be sure to look over your current practices regarding the payment of tronc during holiday periods. Many businesses have established practices that continue to pay tronc even when staff are away, and this may cause issues under new legislative practice as the code prioritises hours worked as a primary factor in deeming what is ‘fair’ under the legislation.
9. Train your teams.
Training is going to be of huge importance in ensuring that your teams understand their rights, and your managers understand the importance of a fair tip allocation policy and how to distribute tips fairly. By training your teams, you will ensure the highest level of understanding and build trust with your teams.
A confident, informed team reduces disputes and builds trust, and our dedicated Allocation of Tips Act e-learning courses make that learning simple, accessible and up to date.
How you can get ready ahead of the new tipping laws.
At Access CPL Learning, we’ve developed two e-learning courses to help operators and their teams navigate the Allocation of Tips Act confidently.
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A manager course that covers compliance, responsibilities and fair distribution.
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A team-member course that helps staff understand how the law protects their tips.
Created in collaboration with TiPJAR, the award-winning cashless tipping and tronc platform, these courses continue to evolve in line with the latest guidance and the 2025 Code of Practice.
Equip your teams with the knowledge they need to stay compliant and uphold fairness in tip distribution, strengthening both trust and transparency across your operation.
Explore our compliance courses or contact us to learn how CPL Learning can support your compliance journey.