Direct service 2026: Fair tipping Guide
Hospitality is an inherently generous industry, built by people who care. We celebrate brilliant service, we champion young talent, we discuss the industry’s problems endlessly over coffees and pints.
Large hospitality operators play an enormous role in shaping those conversations. Their policies affect thousands of employees and often influence the wider industry.
And yet, despite years of debate, the introduction of the Employment (Allocation of Tips) Act, and a strengthened emphasis on Direct Service in draft revisions to the statutory Code of Practice, some operators are still diverting tips away from the people customers intended to reward.
We know margins are tight, and that enterprise hospitality businesses are complex. We know operators felt there were some grey areas in existing legislation.
For TiPJAR, the principle at the heart of it is straightforward: tips should reach and benefit the people customers intended to reward.
Tips come with an expectation
A customer leaves a tip because of the experience they received, in that venue, at that moment. They aren’t contributing to a central overhead budget. They aren’t rewarding a central support function they never met.
This is in no way a criticism of head office teams! Great enterprise-scale hospitality businesses rely on brilliant people in finance, HR, operations and marketing.
It’s simply recognising that tips are different. Unlike room revenue, food sales or drinks sales, tips arrive with an implied purpose. Customers aren’t simply spending money. They are showing gratitude.
The further money moves away from the service experience that generated it, the harder it becomes to argue that the distribution reflects the customer’s original intention.
We’ve already seen high-profile hospitality brands under scrutiny over tipping practices. These are businesses renowned for exceptional food, service and customer experiences. If organisations of that calibre can get this wrong, the rest of the industry should be paying attention.
It’s just good business
Here’s the irony; at the same time we’re all talking about recruitment challenges, retention issues and how difficult it is to attract great people into hospitality, some businesses are still money away from the very teams they’re trying to retain.
Fair tipping doesn’t solve every staffing challenge. But if people feel valued and fairly rewarded for the service they provide, they’re more likely to deliver an exceptional customer experience.
As the revised Code develops, there’s a useful question for every operator to consider:
Would I feel comfortable explaining our tipping policy to the customer who left the tip?
It’s a simple way to look at what can be a complex area. If the answer isn’t completely straightforward, it may be worth taking another look at whether your approach reflects the principles of fair and transparent tipping.
Book a tipping review
The proposed changes are an opportunity to sense-check your current approach and ensure it reflects best practice.
If you’d like to discuss your tipping arrangements, review your tronc structure, or explore ways to improve transparency for your teams, we’d be happy to help.
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