Two years on: HOSPA’s tips and troncs guide sets out clear advice for hospitality businesses in the UK

Two years on from the introduction of new tipping legislation, HOSPA has launched a practical guide to help hospitality businesses navigate the ongoing impact of the changes.

The guide, A practical guide for the UK hospitality industry: Tips, gratuities, service charges and troncs, has been produced to support hotels, restaurants, bars and wider hospitality operators as they continue to adapt to the Employment (Allocation of Tips) Act 2023, which came into force in October 2024.

The legislation introduced one of the most significant changes to tipping practices in the hospitality sector for decades, requiring qualifying tips, gratuities and service charges to be allocated fairly and transparently to workers.

HOSPA’s new guide explains the key areas businesses need to understand, including the different types of tips and service charges, legal ownership of gratuities, tronc schemes, written policies, record keeping, tax treatment, National Insurance, VAT and enforcement.

It also provides practical guidance around areas that have become particularly important since the legislation came into force, including the requirement for qualifying tips to be paid to workers by the end of the month following the month in which they were received, the need to keep clear records for three years and the inclusion of agency workers within fair allocation processes.

The introduction of the new tipping legislation has prompted many hospitality businesses to take a much closer look at how tips, gratuities, service charges and troncs are managed. Two years on, the principles of fairness and transparency are now much better understood, but there is still a great deal of complexity for operators to work through. From written policies and record keeping to agency workers, payroll, tax and tronc arrangements, the detail really matters.

Our aim with this guide is to give hospitality businesses a clear and practical resource they can use to review their current approach, identify any areas of risk and make sure their systems are working properly for both the business and its teams

Jane Pendlebury, CEO of HOSPA

The guide highlights that businesses can no longer use qualifying tips to cover operational costs, administration fees, card charges or tronc management costs. It also makes clear that employers must have a written policy where tips are received on more than an occasional basis, and that workers have the right to request certain records relating to employer-received tips.

HOSPA says that while many businesses have already made significant progress, the next stage is about ensuring compliance is embedded into day-to-day operations.

Jane continued: This isn’t simply an issue affecting payroll, it also affects finance, HR, operations, recruitment and the way businesses communicate with their teams. The best operators are those treating this as part of wider good governance, not just as a one-off legal change. For hoteliers in particular, the challenge can be more complex because tips and service charges may be generated across multiple departments, from restaurants and bars to events, room service and accommodation. That makes clarity, consistency and record keeping absolutely essential.

Sponsored by BDO, the guide has been compiled for HOSPA by sector specialists Jacqui Roberts, of BDO, Katie Linstead of Grateful and Peter Davies of Moore Kingston Smith, with Diana Mountain, Finance Consultant, as editor and Howard Field, founder of BAHA, now HOSPA, as expert advisor.

HOSPA is encouraging hospitality businesses to use the guide as a practical checklist to review their current arrangements and seek professional advice where needed.

Jane concluded: “Tips and service charges have always been an important part of hospitality, but the way they are handled now carries much greater scrutiny. Businesses that can demonstrate fairness, transparency and strong governance will be in a far better position to protect their teams, reassure customers and avoid future disputes.”

For more information on HOSPA and to access the guide, please visit https://www.hospa.org/tips-and-tronc-guide  

Media Contact

Jane Pendlebury

Chief Executive [email protected] + 44 (0) 203 418 8196