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Tip sharing rules outside the US: the UK, Ontario and Australia

Last reviewed 2026-11-07 · Outside the US

Three countries, three very different starting points. The UK now has the most prescriptive tipping law in the English-speaking world; Ontario has a short statute that mostly says “hands off”; Australia has almost no law on tips at all and relies on award wages and tax rules. Here is what each means for a pool.

United Kingdom: the Employment (Allocation of Tips) Act 2023

In force since 1 October 2024 (England, Scotland and Wales), the Act inserted Part 2B into the Employment Rights Act 1996. The rules, and the statutory Code of Practice tribunals must take into account:

• 100% to workers. All “qualifying tips, gratuities and service charges” — tips paid to the employer, and cash tips the employer controls — must be passed to workers in full, with no deductions other than tax and National Insurance. Card processing fees, breakages and till shortages cannot come out of tips.
• Fair and transparent allocation among the workers at the place of business, including agency workers. “Fair” does not mean equal; the Code lists legitimate factors — role, basic pay, hours worked, individual or team performance, seniority, length of service and customer intention — and warns against fixed or guaranteed sums for particular roles and against anything indirectly discriminatory.
• Timing. Tips must be distributed no later than the end of the month following the month the customer paid them (a tip left on 23 June must be paid by 31 July).
• Written tipping policy, available to all workers, covering how tips are accepted, allocated and distributed. Only employers who receive tips “occasionally and exceptionally” are exempt.
• Records of all qualifying tips and each allocation, kept for three years. A worker may request, once every three months, the total tips and their own allocation for up to the previous three years; the employer has four weeks to answer.
• Troncs. The employer may delegate allocation to an independent tronc operator (a staff member, an external payroll firm or a worker chosen by colleagues). The employer stays responsible if it knows the tronc is acting unfairly. A tronc run properly also means the tips are paid free of employer and employee National Insurance.
• Enforcement. Employment tribunal claims within 12 months; the tribunal can order the employer to revise its allocation and pay compensation of up to £5,000 per worker.

What is changing: the Employment Rights Act 2025 added a duty to consult workers (through a recognised trade union or other representatives where they exist) when writing or reviewing the tipping policy, to review the policy at least every three years, and to publish an anonymised summary of the consultation. A revised Code of Practice reflecting this was issued in draft in August 2026 and is not yet in force; the 2024 Code applies until Parliament approves the replacement. Check the gov.uk page for the current version.

In practice, a UK house splitting by hours or by role points × hours is squarely within the Code, provided the factors are written down, applied consistently and the record of each allocation is kept.

Canada: Ontario’s Employment Standards Act, Part V.1

Employment law is provincial in Canada. Ontario’s rules (ESA 2000, sections 14.1–14.5) are the model several other provinces have followed:

• No withholding. An employer may not withhold, make deductions from, or cause the employee to return tips, except where a statute or court order requires it, or to redistribute them through a tip pool. Deducting card processing fees or losses is not allowed.
• Owners in the pool. An employer, director or shareholder may share in a pool only if they are a sole proprietor, partner, director or shareholder who regularly performs, to a substantial degree, the same work as the employees in the pool (or as employees in the industry who normally receive tips). A corporate owner who runs the floor every night can share; one who drops in cannot.
• How tips are paid. Since 2022 amendments, tips must be paid by cash, cheque payable only to the employee, or direct deposit into an account in the employee’s name that only the employee (or someone they authorise) can access.
• Records and policy. If the employer has a policy on sharing tips, it must be posted where employees can see it, and a copy kept for three years after it ceases to apply.

Other provinces: Quebec’s Act respecting labour standards (s. 50) makes tips the employee’s property and bars employer-imposed sharing; British Columbia (ESA ss. 30.3–30.4), Newfoundland and Labrador, New Brunswick and Prince Edward Island have statutes similar to Ontario’s. Alberta and Saskatchewan have no specific tip statute. Federally, the Canada Revenue Agency treats “controlled tips” that pass through the employer as pensionable and insurable earnings subject to CPP and EI, while “direct tips” handed to staff are not — a reason many Canadian operators keep card tips and cash tips tracked separately.

Australia

Australia has no federal or state law that requires tips to be passed on or that regulates tip pools. The Fair Work Act and the hospitality awards set minimum wages that must be paid in full; tips can never form part of award wages, and penalty rates and loadings apply regardless of tips. Beyond that, how tips are shared is a matter of the employer’s policy and the employment contract — so the “rules” are whatever you have written down, and a worker’s remedy for an unfair pool is a contract claim or a complaint to the Fair Work Ombudsman about the underlying wages, not a tipping statute.

Two things are regulated. First, tax: the Australian Taxation Office requires employees to declare all tips as assessable income, whether cash or passed on through the employer; tips distributed via payroll appear on the income statement, and tips an employer keeps are the employer’s business income. Second, consumer law: a surcharge or service charge must be disclosed before the customer orders, and card surcharges may not exceed the cost of acceptance. An employer that calls a charge a “tip” to customers and keeps it risks a misleading-conduct claim under the Australian Consumer Law. A clear written policy, an hours- or points-based split and a per-shift record give Australian operators the same protection the UK and Ontario statutes impose by force.

This guide is general information for operators, not legal, tax or payroll advice. Rates and rules change; the official sources above are the authority. SplitTips applies the rule you set and does not decide what is lawful in your jurisdiction.