Tips are the part of the pay packet everyone has an opinion on. Customers think they’re rewarding the person who served them. Staff count on them to make the numbers work. And since October 2024, the law has had a very clear opinion too.
Now two tribunal claims in London are putting that law to the test. One asks what actually counts as a tip. The other asks whether tips are being shared fairly and openly. Between them, they cover the questions every restaurant, bar, hotel and casino should be able to answer.
Nothing has been decided in either case yet, so everything below is about allegations, not findings.
A quick refresher on the law
The Employment (Allocation of Tips) Act 2023 came into force on 1 October 2024. Employers must pass on 100% of qualifying tips, gratuities and service charges to workers, in a fair and transparent way.
In plain English, that’s 4 duties:
- Pay tips out in full, with no deductions.
- Share them fairly.
- Have a written tipping policy staff can see.
- Hand over tipping records when a worker asks. Employers have 4 weeks to respond, and records should be kept for 3 years.
The statutory Code of Practice sets out how fairness is judged. It doesn’t dictate one formula. It asks for a clear, objective method you can justify, weighing factors such as role, hours, basic pay, seniority, length of service, performance and customer intention.
Get it wrong and a tribunal can order you to pay what’s owed plus compensation of up to £5,000 per worker. For more on how that judgement works, read how would a tribunal assess whether your tipping policy is fair?
Harrods and the £1 question
29 Harrods restaurant workers, backed by the United Voices of the World (UVW) union, have brought a claim that was listed for a full hearing in September 2026. It’s widely described as the first UK legal challenge testing what qualifies as a tip under the 2023 Act.
The charge in question is a £1-per-person cover charge. It was introduced in November 2023 and made mandatory from October 2024, the same month the tipping law came into force. Harrods has passed 100% of its service charge to staff since January 2022, but the £1 cover charge goes to the business.
So the service charge is shared and the cover charge isn’t. The tribunal has to decide whether that second pound should be.
The workers’ case
The staff argue the cover charge is a tip in all but name. UVW says no extra food or service is given in return, and that managers have been able to remove the charge when customers ask.
They also say it’s costing them twice over. Workers claim some customers have started removing the separate discretionary 12.5% service charge since the cover charge arrived. UVW also alleges Harrods hasn’t provided a clear written policy or full records showing how the cover charge money is handled.
UVW’s general secretary Petros Elia put it neatly. A charge that “walks and talks like a service charge” should be treated like one.
Harrods’ case
Harrods denies the claims. It says the £1 cover charge is standard for high-demand luxury dining, is compulsory, supports the quality of its restaurants and is entirely separate from the discretionary service charge.
It also says both charges are set out in policy documents, and that UVW isn’t a recognised union at Harrods and had no direct role in shaping its policies.
Why it’s tricky
The Act covers tips, gratuities and service charges, but leaves a lot riding on the facts of each case. What is interesting is that if a tribunal decides a charge is a tip, a policy that labels it as something else may not protect the employer.
Any venue with a “table charge”, “cover fee” or “brand charge” should be paying close attention. Our guide to cash tips, discretionary service charges and mandatory service charges explains how each one is treated.
The Mayfair casino and the fairness test
The second claim comes from a former waiter at the Metropolitan Mayfair, part of the Metropolitan Casinos group, which runs 7 casinos in the UK and 4 in Egypt. He’s filed a complaint with the London employment tribunal over cash tips given directly to him, which he says he was made to share with managers and other staff.
He also says management, including senior managers, seemed to get a bigger slice of the service charge despite not serving customers or working the floor. After 5 years with the group, he says the company refused to explain how the service charge was shared, so he couldn’t tell whether it was fair.
For context, the casino adds an optional 12.5% service charge to food and drink in its restaurants and bar. Tips and service charges run to thousands of pounds a day, a big chunk of frontline earnings.
Then there’s the dismissal. The waiter says he was let go after asking what happened to the service charge and card tips. The company says it had evidence he’d kept a large cash tip for himself instead of pooling it. He denies this and is bringing a separate claim for wrongful dismissal.
The casino doesn’t comment on individual cases. It says it doesn’t benefit from staff tips, that allocation is decided independently under the legislation, and that it’s confident its policies comply with the law.
Where the claim bites
On paper, the casino ticks the fairness box. Its policy says an independent Troncmaster allocates the service charge using objective criteria such as hours, role and contribution to service.
The trouble is the gap between the policy and the floor. Three pressure points stand out.
- Managers in the cash pot. A former worker said a manager shared out cash tips weekly and usually took home £150 to £300. Managers can legally share tips. But customer intention and basic pay are both fairness factors, and an equal split with the highest earners who spend the least time serving is a tough sell.
- Cash tips pooled on company rules. Cash handed straight to a worker and kept by them usually sits outside the Act. Once the employer requires it to be pooled and a manager divides it up, the employer has control, and the fairness duty kicks in.
- The customer’s intention. The claimant says customers tipped believing they were rewarding frontline staff, but the money ended up shared with management. That’s exactly the mismatch the Code asks employers to think about.
Transparency is the bigger own goal
Even if the split were fair, nobody could prove it. Payslips reportedly don’t show how the service charge share is worked out and don’t mention card tips at all. The policy says tronc rules will be displayed in venues, but workers said they’d never seen them up.
One payslip tells the story. It showed £13.50 an hour and £97 of service charge in a month of 120 hours. Maybe that’s right. Maybe it isn’t. When staff can’t check, they assume the worst, and a £97 line with no working behind it is a claim waiting to happen.
Transparency is a legal duty in its own right. A policy that lives in a drawer does very little to meet it.
What the two cases have in common
Different venues, different questions, same root cause. In both, staff say they couldn’t see where the money went.
The Harrods workers point to a missing written policy and records for the cover charge. The Mayfair waiter says he asked how the pot was split and got no answer. The lesson for every venue is the same: if your staff can’t see how tips are handled, a tribunal will ask to.
When will we know?
Probably not for a little while yet. Here’s how the timeline usually plays out.
- The decision. A tribunal can rule on the last day of a hearing, but for a first-of-its-kind case the judge is likely to “reserve” judgment and write it up afterwards. That often takes several weeks to a few months.
- Publication. Written judgments normally appear on the government’s employment tribunal decisions database. For Harrods, that points to late 2026 or early 2027.
- Appeals. Either side can appeal to the Employment Appeal Tribunal, usually within 42 days of the written reasons being sent. Given the stakes, that could push the final word well into 2027.
There’s also the chance of a settlement or postponement, which would leave the industry without the clear answer it’s hoping for. Treat any date as a best guess until the tribunal speaks.
The rules are tightening too
The Employment Rights Act 2025 will require employers to consult a recognised union or employee representatives when first introducing a tipping policy, and to review it every three years. The consultation duty was due to start in October 2026, but it’s been pushed back, probably to the new year.
It’s been a bumpy ride. The government withdrew its first draft of the updated Code in July after Unite called it flawed, then published a revised draft for consultation. That consultation closed on 29 September 2026 and responses are now being analysed. We covered the twists and turns in the tipping Code of Practice has been withdrawn, here’s what happens now.
Meanwhile, the October 2024 rules are still fully in force. Waiting for the new Code is no reason to sit on an old policy. For the bigger picture, read the Allocation of Tips Act two years on.
How to stay out of the tribunal waiting room
Most of this is fixable with good housekeeping, and none of it needs a Knightsbridge budget.
- Check every line on the bill. Anything that isn’t food or drink deserves a hard look. Would a customer reasonably think it goes to the team? If yes, you’ve got a risk.
- Watch the waiver. If managers can knock a charge off when a guest pushes back, that looks a lot like discretion, which is exactly what the Harrods workers are arguing.
- Give every employee a tronc agreement. In the schemes we run, every employee has their own tronc agreement setting out their basis of distribution. When a question comes up, there’s a clear reference point long before anyone reaches for a tribunal form.
- Show the working on every payslip. Separate lines for service charge and card tips, with the hours or points used. A payslip that explains itself heads off most disputes before they start.
- Make independence real. A Troncmaster should be visibly separate from management, with their own records and a clear route for staff questions. Our page on troncs explained covers the basics, and HMRC’s E24 guidance sets out how a genuine tronc affects National Insurance.
- Justify manager shares in writing. If managers take part, set out why and on what basis. A reduced share reflecting higher basic pay and less floor time is much easier to defend than an equal split.
- Formalise cash pooling. If cash tips must be pooled, record them daily, count them with two people present and share them by the published formula. It protects staff, and it protects managers from awkward accusations.
- Put it in writing and keep records. A clear, published tipping policy shows how every charge is treated and shared. Keep tipping records for 3 years.
- Treat questions as a right. Send queries to the Troncmaster first, as they set the basis of distribution. Answer in writing, within 4 weeks, with the numbers. Stonewalling turns a query into a grievance and a grievance into a claim.
- Keep discipline and tips separate. If misconduct is suspected, run a fair, documented process with clear evidence. When a dismissal follows soon after someone asks about tips, the timing will be examined closely.
Fair for all
Tips belong to the people who earn them. The fair way to share them is the one you can explain to a waiter at 2am, with the numbers on their payslip to back it up.
Fancy a second pair of eyes on your charges, policy or tronc before either ruling lands? Tips+Troncs runs independent tronc schemes and offers tips consultancy, and Ascend makes sure every penny lands on the payslip where it should. Get in touch and we’ll take a look.