The study by digital tipping platform URocked also found that a quarter of employers have admitted to making no changes since the law came into effect in October 2024, and mong restaurant staff, 24% report seeing no changes in how their employers handle tips.
Only 20% say they have received more tips since the legislation was introduced, while 23% report receiving fewer.
The Allocation of Tips Act came into effect on 1 October and requires businesses to pass on 100% of tips and service charges to staff. It made it unlawful for businesses to hold back service charges from their employees, ensuring staff receive all of the tips they have earned.
However, the research of 250 hospitality employees, 150 decision makers in full-service hospitality venues that take tips or add a service charge, and 1,000 consumers, found gaps in employers’ understanding of the law. While 53% of decision-makers correctly stated that 100% pass-through is required, 45% still believe deductions or exemptions are permitted or that they are free to distribute as they see fit, according to URocked.
Additionally, 14% of staff don’t think their employer is complying with the law, it found.
The research suggests potential for increased customer tipping, with 60% of staff believing customers would tip more if they better understood the legal requirements. Currently, 22% of staff across the sector rely significantly on tips as part of their income.
It also found that 85% of respondents say the new law has made things fairer for staff.
“While nearly nine out of ten respondents say the new law has made things fairer for staff, our research shows there’s still work to be done in building consumer trust and ensuring universal employer compliance,” says David Dillon, URocked CEO.
“Too many businesses in the sector are either unclear on the rules or have failed to make the changes required, and that leaves both staff and customers questioning whether tips are being handled fairly.
“Transparency and education are now key to improving confidence across the sector.”