The first tips legislation tribunal is coming – what does this mean for you?

A landmark case under new legislation

On 9 August, The Guardian reported that The Ivy Brasserie Group is set to face an employment tribunal in April 2026. This will be the first legal test of the Employment (Allocation of Tips) Act, which came into effect on 1 October 2024.

The case is expected to examine how tips and service charges are distributed among staff, and whether these arrangements meet the standards of fairness and transparency outlined in the legislation. It’s important to note that the third-party tronc provider referenced in the article is not WMT Troncmaster Services, the tronc services arm of Moore Kingston Smith.

Understanding the legislation

Originally announced in 2018 and introduced via a Private Members Bill, the Act was designed to ensure that 100% of tips and service charges paid by customers are allocated to staff. However, by the time the legislation was laid before Parliament, the scope had expanded to cover broader operational practices, introducing new compliance requirements for hospitality businesses.

Two key terms, “fair” and “transparent”, are central to both the Act and its accompanying Code of Practice. However, these terms are not clearly defined in law, leaving room for interpretation and potential disputes.

Fairness: The Act allows employees to challenge tip distribution systems based on their personal view of fairness. This could lead to legal action even in workplaces where the majority of staff are satisfied with the arrangements.

Transparency: Regulation 27J requires businesses to disclose site-level monthly totals of tips and service charges, but not individual allocations. This has led to confusion among staff who may expect more detailed breakdowns, despite data protection laws that safeguard individual earnings.

Why this tribunal matters

This tribunal could set a precedent for how the Act is interpreted and enforced. With its broad and subjective language, the legislation may lead to further legal challenges across the sector. Operators should be prepared to demonstrate compliance not only with the letter of the law but also with its spirit, ensuring systems are robust, well-documented, and defensible.

Expert support with employment tribunals

WMT Troncmaster Services, part of Moore Kingston Smith, is offering specialist support to the hospitality sector dealing with disputes under the Employment (Allocation of Tips) Act.

This includes:

• independent expert analysis of tronc systems and tip/service charge allocation;
• support at tribunals from expert witnesses with many years of experience in tips, gratuities and tronc systems (including a former HM Revenue & Customs Inspector who helped author HMRC guidance on the subject), HR specialists and employment lawyers;
• support for legal teams navigating complex disputes under the new legislation.

We can work seamlessly with existing or in-house HR and legal teams. If you don’t have access to these resources, Moore Kingston Smith can provide comprehensive HR and legal support alongside our expert services, ensuring you’re fully equipped to manage the tribunals with confidence.

To discuss how we can support your business, please contact Peter Davies.

For more details of our broad range of hospitality services, click here.