All you need to know about tipping

Thomas Pertaia from DAS Law has the answers on tipping in the UK.

4th December 2019

Christmas is just around the corner and bars and restaurants are gearing up for the most festive and busiest time of the year. It is definitely the ‘season to be jolly’ and many of us will be flocking to Christmas parties, work functions and catching up with friends.

Whilst it may be the time for giving, we’re still unsure of the right etiquette when it comes to tipping. Are we legally obliged to do so? Does that money actually go to the staff or is it kept by the business owner?  And as an employee, what does the law say about paying tax on the tips you receive?

For consumers

Am I obliged to give tips?

There is no legal obligation to tip, so if you decide to offer a tip it is at your discretion.  Some establishments will state that there will be an obligatory tip; for example, when the number in your party goes over a certain threshold, paying the tip forms part of the contract that you are agreeing to with the restaurant.

How much is the standard for tipping in the UK?

The standard tip in the UK is around 10%, but tipping is not an absolute expectation in most establishments.

I have seen that there is an increase in the number of restaurants that have a ‘suggested tip’ amount included on the bill.  Do I have to pay this or can I change it?

There is no obligation to pay a suggested tip and no obligation to comply with the suggested tip. Feel free to deviate from the suggestion if you feel that the service does not warrant the amount suggested.

Am I allowed to refuse to pay a tip at all?

As already mentioned, because there is no legal oblation to pay a tip, you can make the decision as to whether to tip or not.

For employees

Do I legally have to report all tips I receive to HMRC?

Tax is payable on tips and would have to be reported to HMRC. However, whether you are responsible or the employer is responsible will depend on the way tips are paid to you.

If you get tips directly from a customer, you will be responsible to pay tax and if you fill in a Self-Assessment tax return, you have to include the tips on it. If you don’t fill out a tax return then HM Revenue and Customs (HMRC) will estimate your tips based on information from you or your employer.

If your employer pays the tips directly to you, they are responsible for making sure Income Tax is paid through PAYE.

Where I work we pool our tips and share them equally. I make considerably more tips that my colleagues and don’t want to participate in the scheme – can I refuse and keep my own tips?

How the tips are handled will generally be decided by the employer.  There may be an agreement in place where a person other than the employer (called tronc master), is responsible for making arrangements to share tips amongst employees.  In these circumstances, it is the tronc master who decides how the tips are shared.

Participation is not compulsory and you will have to check with the employer if there are alternatives available in relation to possible retention of tips.

As an employer

Am I allowed to insist that employees disclose their tips?

As an employer, you can request that the employees disclose the tips paid to them during their employment with you.

Can I ban employees from taking tips?

Whilst it may not be best practice or advisable, employers are within their rights to prohibit employees from accepting tips.

What’s the law on tipping in the UK?

The law around tipping is rather vague, with no specific legislation in place. However, what is clear and enshrined in law is that tips cannot be used to meet national minimum wage obligations of the employer, meaning that if they are paid, then they need to be paid in addition to the National Minimum Wage.

There have been discussions about reform in this area and the introduction of legislation, but this has not materialised yet.

The Government has a Code of Practice (National minimum wage: code of best practice on service charges, tips, gratuities and cover charges) on how employers should handle tips. However, the code is voluntary and there is no obligation on an employer to follow it, but if an employer wants to operate a ‘best practice’ business they would be advised to comply with the code of practice.

Disclaimer: This information is for general guidance regarding rights and responsibilities and is not formal legal advice as no lawyer-client relationship has been created. Note that the information was accurate at the time of publication but laws may have since changed.

Is the customer always right when it comes to alcohol and pregnancy?

A recent Reddit post sparked debate on personal accountability and the rights of serving staff when it comes to alcohol. Larna Mason explains what the law says.

August 2019 Learn more

Read more from the DAS Law blog

Goods and services disputes How to escape your gym contract in the new year

Gyms are prepared for a New Year’s resolution rush and every January, millions of people rush to sign expensive gym membership contracts. But how fair are these contracts and can you terminate them if your situation changes?

January 2020
General advice , Employment disputes Beware the perils of sharing colleagues’ Christmas party antics on social media

Are people allowed to record and share your more embarrassing moments without your permission? What does the law have to say?

December 2019
Employment disputes , Goods and services disputes All you need to know about tipping

Are we legally obliged to tip? Does that money actually go to the staff or is it kept by the business owner? Thomas Pertaia has the answers.

December 2019
Goods and services disputes 7 questions Black Friday and Cyber Monday shoppers should ask

If you are waiting to see the myriad of deals that Black Friday and Cyber Monday will offer, you need to know your rights when it comes to buying online.

November 2019
Employment disputes International Stress Awareness Week: your workplace rights

To mark International Stress Awareness Week, Hannah Parsons, a solicitor at DAS Law, takes a look at what the law says your employer needs to do about stress.

October 2019
Employment disputes How to deal with mental health discrimination at work

There are legal protections in place to support those with a mental health condition. Here’s what you need to know if you are being treated unfairly at work because of your mental health.

October 2019
Employment disputes Don’t get a red card while watching the World Cup at work

If you are planning on watching World Cup matches at work there are a number of important things to consider.

September 2019
Goods and services disputes What to do if a faulty product causes damage to your home

What happens if a faulty product results in damage to you or your property? Is the manufacturer liable or will your insurance cover it?

September 2019
Employment disputes Can your boss force you to work the August Bank Holiday?

Can you refuse to work on a bank holiday? DAS Law’s Hannah Parsons outlines your rights.

August 2019
Employment disputes , Goods and services disputes , Professional services disputes Is the customer always right when it comes to alcohol and pregnancy?

A recent Reddit post sparked debate on personal accountability and the rights of serving staff when it comes to alcohol. Larna Mason explains what the law says.

August 2019
Employment disputes What employers should do during a heatwave

What are an employer's obligations to employees when the weather gets too hot? Hannah Parsons gives the lowdown.

July 2019
Goods and services disputes , Family Summer holiday clubs: your rights explained

What can you do if a plan to send your child to a summer holiday club goes awry due to sickness or cancellation? DAS Law investigates.

July 2019
Employment disputes , Protecting your business How working time regulations can limit your employees’ hours

A study by French researchers has highlighted some of the health risks faced by those working long hours. Sarah Garner, Solicitor at DAS Law, looks at the specific rules and regulations regarding the working day.

July 2019