🇬🇧 This tool is for use in England, Scotland and Wales only. It is designed to help operators comply with the Employment (Allocation of Tips) Act 2023, which came into force on 1 October 2024. Different rules apply in Northern Ireland. Always confirm your obligations with your employment law adviser.

How this tool works

Enter the total tips or service charge to be distributed, add each eligible staff member and select your distribution method. The tool calculates each person's share and produces a printable distribution record.

Equal Split — the total is divided equally between all eligible staff regardless of hours or role
By Hours Worked — each person receives a share proportional to the hours they worked in the period
By Points — you assign a points weighting to each person (e.g. reflecting role, seniority or hours) and tips are divided proportionally
Under the Act, tips must be allocated fairly and a written policy must be available to all workers. Kitchen staff must be included unless your policy explicitly excludes them with documented justification
Tips paid through payroll are subject to Income Tax and National Insurance in the normal way

Distribution Details

Total Tips / Service Charge (£)

Period

Business Name

Distribution Method

Eligible Staff

Name	Role	Hours	Points	Share

What the Act Requires

From 1 October 2024, all employers in England, Scotland and Wales must pass on 100% of tips, gratuities and service charges to workers without any deduction (other than Income Tax and National Insurance through payroll). Employers can no longer retain any portion of tips.

Who is Covered

The Act covers employees, workers and agency workers. It applies to tips left by customers in cash, added to card payments, or collected as a service charge. It does not apply to tips paid directly by a customer to a worker and kept by that worker without employer involvement.

Fairness Requirement

Tips must be distributed fairly. The statutory Code of Practice provides guidance on what fair means in practice. Factors that can legitimately be taken into account include: type of work, hours worked, seniority, and contribution to the customer experience. Discrimination on protected characteristics (age, sex, race etc.) is not permitted.

Written Policy

Employers with more than 10 workers must have a written tips policy and make it available to all workers. Smaller employers are strongly advised to maintain one regardless.

Tronc Schemes

A tronc is an independent tip-sharing arrangement administered by a troncmaster (who may be an employee). Tips distributed through a qualifying tronc scheme are exempt from employer National Insurance contributions — though workers still pay Income Tax and employee NI. HMRC approval is not required but the scheme must meet specific conditions.

Right to Request a Statement

Workers have the right to request a written statement of their tips for any month in which they received tips. Employers must respond within 4 weeks. Records must be retained for 3 years.

Northern Ireland

The Employment (Allocation of Tips) Act 2023 does not apply in Northern Ireland. Separate legislation is expected but had not come into force at the time this tool was created. Always check current legislation for your jurisdiction.

This tool applies to England, Scotland and Wales only. It is provided as a guide and does not constitute legal or tax advice. Always consult your employment law adviser and payroll provider regarding your specific obligations under the Employment (Allocation of Tips) Act 2023. JWBIZ Ltd accepts no liability for decisions made on the basis of this tool.

Tips & Tronc Calculator