Be clear about tips and gratuities this Christmas


Following a Government investigation into how businesses in the hospitality sector treat tips and gratuities, bars and restaurants are urged to put in place a clear policy in the lead up to Christmas.

The Government investigation came about following protests by the union, Unite and others.  Pizza Express attracted criticism for imposing an administrative charge of 8% on tips paid by card.  If tips are not fully passed on to workers, customers should be made aware of this.  Problems arise when the procedure for handling tips and gratuities is not transparent and can cause negative publicity amongst staff and customers.

There is currently no requirement for employers to pass all tips and gratuities on to their staff but regulation could be forthcoming.  Employers may wish to consider whether to deduct an administration charge for distributing tips and gratuities in the future in view of the current negative publicity surrounding this practice.   Businesses are advised to use an HMRC approved system to manage tips and gratuities to avoid incurring significant tax liabilities and potential claims for unlawful deductions from staff.

For further information or for a draft policy, please contact us on 0207 408 9427 or 0115 9886211 or email us at