A landmark employment tribunal involving The Ivy could become one of the first major tests of the Employment (Allocation of Tips) Act 2023, designed to ensure fairness and transparency in how tips and service charges are distributed.
The case, scheduled for April 2026, stems from a waiter’s claim that he received only £97 from a £31,562 service charge pot, despite working around 2% of the total recorded hours, and therefore being owed more. He has since alleged constructive dismissal, arguing that the restaurant’s tip distribution system breached the new law.
What’s in the Employment (Allocation of Tips) Act 2023?
The 2023 Act requires:
- Fair allocation of tips and service charges among workers.
- Transparency, so employees can see clearly how shares are calculated.
- Written policies outlining how tips are managed and distributed.
- Records of all tips and service charges to be kept for three years.
For more information on the biggest mistakes made by employers when it comes to compliance with Employment (Allocation of Tips) Act 2023, take a look at our most recent blog by clicking the link here.
What will this tribunal mean for the act?
This tribunal could provide much-needed clarity on what “fair” and “transparent” actually mean in practice. For example, if a system uses a Tronc or points-based method as The Ivy does the tribunal may have to decide whether withholding detailed criteria from staff is legally acceptable.
Why does this matter beyond one restaurant?
- Legal precedent: A ruling in favour of the waiter could force hospitality businesses nationwide to review and potentially overhaul their tipping policies.
- Employee rights: It would confirm that workers have the power to challenge opaque or unfair allocations.
- Employer responsibilities: Companies that fail to provide clear explanations and fair systems could face costly claims.
The Employment (Allocation of Tips) Act 2023 was created to stop precisely the kinds of disputes now being tested in court. Whether this case results in a significant shift will depend on how tribunals interpret the legislation.
At JustTip, we believe compliance shouldn’t be complicated. Our digital tipping platform ensures 100% of tips go directly to staff, with full transparency and automatic record-keeping exactly what the law was designed to protect.
The Ivy’s tribunal may not be decided for months, but one lesson is already clear: when it comes to tips, the law is on the side of fairness.
