Various employers (particularly in the hospitality and service sectors) in NI accept tips, gratuities and service charges either in cash or via electronic means.

Tips that are under the control of the employer may (to the extent they are not kept by the employer) be distributed to workers in cash, via payroll, or distributed via a tronc. Through using troncs, the burden of National Insurance on both employers and workers is reduced, whereas any tips paid via payroll are liable to income tax and National Insurance deductions.

In the rest of the UK, changes are being introduced to the way tips are dealt with. The 2023 Employment (Allocation of Tips) Act was passed into law and is due to come into force on 1st October 2024. Under the new provisions, the distribution of tips amongst staff has become regulated. In summary of the changes, employers are now required to distribute all tips without deductions, ensure this is done fairly and transparently, maintain a written policy on tipping and record all tips distributed.

In NI there is currently no requirement that tips received or which come under the control of the employer are disbursed to the workers. In 2022 the Department for the Economy in Northern Ireland stated that it had considered whether similar legislation could be implemented in Northern Ireland. However, no further developments have been made. Therefore, employers in Northern Ireland are currently under no legal obligation to share tips with staff. Consequently, employers will face no legal sanctions for failing to do so.

As part of the Good Jobs Employment Rights Bill consultation, which began in July 2024, the Department for the Economy stated that they are considering legislation which would ensure tips are passed to workers in full. It is possible that the law in this area will evolve in the near future. It is definitely worth monitoring these developments and considering how they may impact your busine