‘Tipping’ guidance for employers

By Napthens

03 Apr 2019

Website

Businesses in the leisure sector should understand how tips should be distributed to staff, an expert has warned.

Oliver McCann, Employment & HR partner at regional law firm Napthens, warns that businesses are facing increased pressure from workers and customers to make sure their distribution of tips is favourable for staff.

These tips or gratuities are commonly given as a reward for good service in the hospitality, leisure and service sectors. Workers may receive them directly from a customer, within a pay packet, or pooled and shared between all staff.

A government consultation was launched into concerns around the treatment and transparency of tips, and in recent months a response called The Good Work Plan was unveiled, confirming new legislation will be introduced.

In the meantime, Oliver warns that it is vital to understand how they should be distributed – ideally through a written policy when a staff member is first employed.

He explained: “Legally, if a worker receives a tip directly it is theirs not the employers, and in theory should be declared to HMRC.

“Card payments are often different and become property of the employer, and there is no legal duty for them to hand them over to staff but in practice many do and indeed a business’ reputation could be damaged if they didn’t.

“It’s also important for employers to understand the relationship between tips and minimum wage – since 2009 employers have been prevented from using tips to meet their minimum wage obligations, so workers must receive them on top of their basic pay.

“Failure to comply can lead to an HMRC investigation and ultimately both financial and reputational damage.

“Likewise, workers have the right to complain if there has been an unlawful deduction from wages – it will only be allowed if it is required by law or permitted by a contract or by written consent.”

Oliver gave his top tips for employers:

Be clear about how tips are distributed Do not use tips to make up national minimum wage Do not make unlawful deductions from wages Remember that you may need to pay whilst absent from work (i.e. holidays, sick leave, parental leave etc.) if the calculation is based on the employee’s average remuneration.

Enjoyed this? Read more from Napthens

Latest news

1

Call to recognise the ‘Now Generation’ of Lancashire leaders Sub36 event

Call to recognise the ‘Now Generation’ of Lancashire leaders

15 Jul 2025

2

Maya Ellis MP hails A582 upgrade funding as major step forward in tackling transport chaos Maya Ellis MP photo

Maya Ellis MP hails A582 upgrade funding as major step forward in tackling transport chaos

15 Jul 2025

3

TSS announce leadership appointments to drive continued growth James Austin, Alistair Bradley and Michael Collum

TSS announce leadership appointments to drive continued growth

15 Jul 2025

4

Date revealed for opening of entries for Red Rose Awards 2026 Red Rose Awards 2025

Date revealed for opening of entries for Red Rose Awards 2026

14 Jul 2025

5

Northcote celebrates marketing award for the 25th anniversary of Culinary Festival Obsession Northcotes winning awards

Northcote celebrates marketing award for the 25th anniversary of Culinary Festival Obsession

14 Jul 2025

Background image for hub sign up block

LBV Hub

Leverage Lancashire Business View platforms

Post your news
Post your events
Post your offers
Build your network
Improve your SEO
Gain coverage in the magazine
Sign-up
Events
LBV123 July/August Launch Event
Lancashire Business View magazine launch
Networking
16 Jul 2025

LBV123 July/August Launch Event

Burnley College University Courses Building, Burnley, BB12 0AN

08:30 - 10:30

Lancashire Built Environment Conference 2025
BEC 315 X 315 Px
Networking
25 Sep 2025

Lancashire Built Environment Conference 2025

Blackpool Football Club, Blackpool, FY1 6HX

08:30 - 13:00

CMI Level 5 Management and Leadership Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Management and Leadership Course

Preston Campus, Preston , PR1 2HE

09:00 - 17:00

CMI Level 5 Project Management Course
UCLanAerialCampus.jpg.jpg
LBV Hub Seminars
21 Feb 2025 - 21 Feb 2026

CMI Level 5 Project Management Course

Preston Campus, Preston, PR1 2HE

08:00 - 17:00

Shaping Preston's future by remembering its past
1750160034867.png.png
LBV Hub Networking
16 Jul 2025 - 16 Jul 2025

Shaping Preston's future by remembering its past

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 20:30

Chamber Summer BBQ
LBV Hub Social
17 Jul 2025 - 17 Jul 2025

Chamber Summer BBQ

The Borough, Dalton Square, Lancaster, LA1 1PP

17:30 - 20:00

BNI presents Lancashire Speed Networking
1.png.png
LBV Hub Networking
17 Jul 2025 - 17 Jul 2025

BNI presents Lancashire Speed Networking

Chorley Football Club, Chorley, PR7 3DU

16:00 - 19:00

The Business Network Central & East Lancashire
LBV Hub Networking
17 Jul 2025 - 17 Jul 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Preston Tech Connection: Web3 is Dead. Or is It?
July Longer Banner.jpg.jpg
LBV Hub Networking
29 Jul 2025 - 29 Jul 2025

Preston Tech Connection: Web3 is Dead. Or is It?

Society1, Coworking Space, Preston, PR1 3LT

18:00 - 19:30

Preston Freelancer Meet-Up: July
Longer July Banner.jpg.jpg
LBV Hub Networking
31 Jul 2025 - 31 Jul 2025

Preston Freelancer Meet-Up: July

Society1, Coworking Space, Preston, PR1 3LT

10:00 - 11:30

Advantage: AI – A Workshop for Business Leaders – August 14th
Navy--Event Tile.png.png
LBV Hub Seminars
14 Aug 2025 - 14 Aug 2025

Advantage: AI – A Workshop for Business Leaders – August 14th

Door4 Office, Burnley Wharf, Burnley, BB11 1JG

09:00 - 12:00

The Business Network Central & East Lancashire
LBV Header (24).png.png
LBV Hub Networking
21 Aug 2025 - 21 Aug 2025

The Business Network Central & East Lancashire

Mytton Fold, Langho, BB6 8AB

11:30 - 14:15

Advertise with us

Reaching 50,000 members, our print, digital and event platforms offer a fantastic way to raise your business profile and help you grow.

Find out more LBV122 Online Graphic
Subscribe now

Weekly news bulletin