Tipping at Christmas & New Year? What the New Law Means for You

The festive season is a time for giving, sharing, and expressing gratitude. For many, this means enjoying meals out, celebrating at parties, or travelling to visit loved ones. In these moments, tipping becomes more than just a gesture—it’s a way to recognise the hard work of hospitality and service staff who ensure our celebrations go smoothly.

With the introduction of the Employment (Allocation of Tips) Act 2023 on 1st October 2024, tipping has also become more transparent and fair. Let’s explore how to navigate tipping this Christmas and New Year while embracing the spirit of the season and ensuring compliance with the new legal requirements.

The Importance of Tipping During the Festive Period

The Christmas and New Year period is one of the busiest for restaurants, bars, and hotels. Hospitality workers dedicate long hours to delivering exceptional service to ensure festive celebrations go off without a hitch.

Tipping during this time is more than a tradition – it’s a way to acknowledge the dedication and hard work of those who make your holidays memorable. Whether it’s a server at a festive meal, a bartender mixing holiday cocktails, or a hotel concierge arranging your perfect stay, your tip makes a difference.

Understanding the Employment (Allocation of Tips) Act 2023

As of 1 October 2024, the Employment (Allocation of Tips) Act 2023 ensures that all tips, gratuities, and service charges are passed directly to workers without deductions. Here’s what you need to know:

• Mandatory Fair Distribution: Employers must allocate all tips received to workers, including both cash and card payments.
• No Administrative Deductions: The law prohibits employers from taking a portion of tips for business costs.
• Transparency in Tip Allocation: Employers must have a written policy that details how tips are distributed.
• Worker Rights: Employees can request information about how tips are handled and distributed, with the right to challenge discrepancies.

This legislation is a huge step forward for fairness in the hospitality industry, ensuring that workers receive the full benefit of customers’ generosity.

How Much Should You Tip This Festive Season?

Tipping customs during Christmas and New Year can vary, but here’s a quick guide:

• Restaurants: A tip of 10–15% of your bill is customary if a service charge isn’t already included.
• Bars: Rounding up your bill or leaving a few pounds is appreciated, especially during busy festive events.
• Hotels: Consider tipping £2–£5 per night for housekeeping and £5–£10 for concierge staff who provide exceptional service.
• Private Events or Parties: If catered, consider tipping £10–£20 per staff member.

How Employers Can Ensure Compliance with the New Law

For employers in the hospitality sector, compliance with the Employment (Allocation of Tips) Act 2023 is essential. Here’s how businesses can meet the legal requirements:

1. Run a Tronc Scheme: A tronc is a system used to distribute tips and service charges fairly among employees. Using a dedicated tronc system ensures transparency and fairness, while also adhering to HMRC regulations.
2. Establish Clear Policies: Employers must provide a written tipping policy, easily accessible to all staff.
3. Leverage Payroll Solutions: Accurate record-keeping is critical. Employers are required to maintain detailed records of tips received and distributed for at least three years.
4. Partner with Experts: Ensuring compliance can be complex, especially when managing tronc schemes and payroll for seasonal staff.

This is where Talk Staff comes in. With extensive experience in payroll and HR services for restaurants, bars, and hotels, Talk Staff offers tailored payroll solutions, including managing tronc schemes, to ensure businesses meet their legal obligations while keeping things simple and efficient. By partnering with Talk Staff, employers can focus on delivering exceptional customer experiences while leaving the complexities of payroll and compliance in expert hands.

Practical Tips for Tipping This Christmas

• Check the Bill: Look for a service charge. If it’s included, additional tipping is optional but appreciated for exceptional service.
• Carry Cash: While card tips are covered by the new law, leaving a cash tip directly can be a personal touch.
• Be Generous: The festive season is the perfect time to show extra appreciation.

FAQs About Tipping and Compliance

• What is a tronc scheme, and why is it important?
  A tronc scheme is a system for distributing tips and service charges among employees, often managed by a tronc master. It ensures compliance with HMRC rules and fair allocation.
• How can I verify my tips are going to staff?
  With the new law in place, businesses must transparently manage and distribute tips. You can ask about their tipping policy for reassurance.
• Does the new law apply to all tips?
  Yes, it applies to both cash tips and card payments, ensuring all are distributed fairly.
• Can Talk Staff help my business manage tip compliance?
  Absolutely! Talk Staff specialises in payroll and HR services, including tronc management, ensuring businesses remain compliant while simplifying operations.

Spreading Cheer with Confidence

Tipping at Christmas and New Year is a wonderful way to express gratitude and embrace the spirit of giving. With the Employment (Allocation of Tips) Act 2023, you can now tip with confidence, knowing your generosity directly benefits the hardworking staff who make your celebrations memorable.

For hospitality employers, compliance with the new law is an opportunity to build trust and morale among staff. By using  payroll services like Talk Staff’s, you can simplify the process and ensure fairness, leaving you free to focus on what matters most – delivering exceptional service this festive season.