Tips..new scam warning !!

£20 an Hour? Not Quite.

How Hospitality Employers Are Using Tips to Inflate the Headline Rate of Pay

Something troubling is beginning to appear with increasing regularity in hospitality recruitment.

A chef sees a vacancy advertised at £18, £20 or even £22 per hour.

They apply believing that is the wage being offered for their skills, experience and professional responsibility.

But somewhere further down the recruitment process — or sometimes when the contract arrives — comes an important qualification:

“Including tips.” Or: “Including tronc.”

That changes the picture considerably.

Current hospitality vacancies demonstrate exactly this type of advertising. Some London-area vacancies advertise hourly rates or salary packages explicitly “including tronc”. Others take the much clearer approach of stating the guaranteed basic hourly rate first, followed separately by the anticipated service charge and the resulting expected total earnings.

Unichef believes there is an important difference between those two approaches, and chefs need to understand it.

Your Tip Is Not Your Employer's Wage

The law is actually remarkably clear on one point,Tips do not form part of basic pay.

The Government's statutory Code of Practice defines basic pay as the amount guaranteed to the worker for their contracted hours. It specifically states that tips are not regarded as basic pay even where the worker has a contractual right to receive them, because the amount is not guaranteed.

There is another important distinction.

Tips, gratuities and service charges have not been allowed to count towards National Minimum Wage pay since 1 October 2009. An employer must satisfy their minimum-wage obligation from qualifying wage payments without relying upon customer tips.

For workers aged 21 and over, the National Living Wage has been £12.71 per hour since 1 April 2026.

So consider a chef vacancy promoted as:

£20 per hour — including tips.

If the guaranteed basic wage were £12.71 and the remaining £7.29 were anticipated tronc or service charge, the employer would actually be funding only £12.71 of that headline £20 rate.

The other £7.29 would be coming from customers.

For a chef working 45 hours a week, that would mean £328.05 of the advertised weekly “£20 an hour” package could potentially be coming from customer gratuities rather than the employer's basic wage.

That is a very different employment proposition from:

£20 per hour PLUS tips.

And it is one that applicants deserve to understand before accepting the job.

Is It Legal?

Potentially, yes — if it is transparent..but only just

There is nothing inherently unlawful about advertising expected total earnings which include tronc or service charge, provided the employer is complying with minimum-wage legislation and the worker receives their lawful allocation of tips.

But that does not mean anything goes.

There is a significant difference between advertising:

£13.50 basic + average £6.50 tronc — typical earnings £20 per hour

and simply advertising:

£20 per hour

before revealing later that the figure includes variable customer tips.

The first tells the chef exactly what the employer is guaranteeing.

The second may create a very different expectation about the contractual rate of pay.

Employment contracts are legally binding agreements and can arise through written or verbal agreement. Acas specifically identifies the rate of pay as one of the terms which may be contained within a job offer. An accepted unconditional offer can itself create contractual obligations. Employers cannot simply change agreed contractual terms without agreement merely because a later written contract says something different.

Employers must also provide employees and workers with written particulars setting out their principal employment terms, including remuneration, on or before the first day of employment.

So if somebody applies for a job advertised at £20 an hour, is offered the job at £20 an hour and accepts on that basis, only then to discover that the employer regards perhaps £6 or £7 of that figure as anticipated tips, we would certainly advise that worker not simply to assume the employer's interpretation is legally decisive.

The advert, correspondence, interview discussions, offer letter and contract may all matter.

The Customer Is Becoming the Employer's Wage Subsidy

This is where Unichef's wider concern begins.

A tip traditionally means something very simple.A customer receives good service and voluntarily decides to reward the people who provided it.

It is a reward from the customer to the worker.

It was never intended to become an accounting mechanism through which an employer could advertise a skilled chef at £20 an hour while personally funding little more than statutory minimum wage.

Yet economically that can be the effect.

The chef still sees £20.The employer can still advertise £20.

But a substantial proportion of the apparent wage is being funded by diners through service charge and gratuities.

That matters enormously in a skilled profession.A qualified Chef de Partie, Sous Chef, or Head Chef should be paid by their employer according to their skills, experience, responsibilities, and contributions to the business.

Customer generosity should sit on top of that value, not disguise how little of that value the employer is actually prepared to pay.

We've Been Here Before

Hospitality has a long and uncomfortable history with tipping.

Before October 2009, tips passing through payroll could under certain circumstances count towards minimum-wage calculations. That was eventually stopped. Since then, tips and service charges cannot be used to satisfy the statutory minimum wage.

But another problem remained.

For many years there was no general legal requirement requiring hospitality employers to pass all service charge income to workers. A Government consultation in 2016 expressly acknowledged that employers were not legally required to pass some or all service charge to staff.

That position changed fundamentally on 1 October 2024, when the Employment (Allocation of Tips) Act 2023 came into force.

Employers must now pass qualifying tips, gratuities and service charges to workers without employer deductions and allocate them fairly and transparently. Workers can challenge failures through the employment tribunal system.

In other words, one of hospitality's old financial cushions was removed.

The customer's tip now belongs where most customers probably assumed it belonged all along:

with the workforce.

Service Charge Was Once a Very Useful Cushion

There is also an important VAT distinction.

A genuinely optional tip or discretionary service charge is generally outside the scope of VAT. A compulsory service charge forms part of the consideration for the meal and is therefore subject to VAT.

Historically, where service-charge money was retained by the business rather than distributed to workers, it became part of the funds available within the business and could therefore support its wider cash flow and liabilities.

We should be careful not to claim that every restaurant specifically used retained tips to pay its VAT bill without evidence.

But the wider principle is undeniable:

money customers may have believed was rewarding staff could historically be retained by the business.

The 2024 legislation was introduced precisely because Parliament decided that arrangement was no longer acceptable.

And now we appear to be witnessing the next adaptation.

If employers can no longer retain the tips themselves, some appear increasingly willing to incorporate anticipated tips into the headline remuneration package instead.

Different mechanism.

Similar financial attraction.

And Then Hospitality Asks for a VAT Cut

This is where the wider political argument becomes uncomfortable.

Parts of the hospitality industry have repeatedly argued that the sector needs financial assistance, lower taxation and particularly a reduced rate of VAT.

There are many excellent hospitality businesses for whom those arguments deserve serious consideration.

Unichef has no interest in attacking responsible employers.

But there is another side of hospitality which policymakers should not ignore.

If an operator pays a professionally qualified chef close to statutory minimum wage and then relies upon customers' tips to transform that into an apparently respectable £18 or £20 hourly package, should that same operator automatically receive further financial assistance from the taxpayer?

We don't believe that question is unreasonable.

Before demanding that Government reduce the tax burden on hospitality, perhaps the industry should demonstrate how much of any saving would actually reach its workforce.

Because there is little public benefit in reducing VAT simply to increase margins while skilled hospitality workers remain dependent upon customers to turn minimum wages into something resembling professional pay.

Unichef's Position: Show the Real Wage

We are not suggesting that tronc systems should disappear.

Properly operated, they allow customers to reward the entire team responsible for their experience — including chefs who might otherwise rarely receive direct tips.

Nor are we suggesting that every employer advertising an inclusive package is behaving dishonestly.

Our demand is much simpler:

Advertise the guaranteed wage separately from the tips.

If the employer pays £14 an hour and staff typically receive another £5 an hour in tronc, say so.

£14 guaranteed basic pay + approximately £5 tronc.

Do not simply advertise:

£19 per hour ( typical earnings )

A customer tip is not an employer's wage, the Government's own statutory guidance recognises that distinction.

Hospitality recruitment should recognise it too.

A Warning to Chefs

When applying for a hospitality position advertised at an attractive hourly rate or annual salary, ask one very simple question before accepting:

“What is the guaranteed basic salary or hourly rate before tips, service charge and tronc?”

Get the answer in writing.

Keep the original vacancy advertisement.

Keep the job offer.

And compare both with the contract you are subsequently asked to sign.

Because £20 per hour and £20 per hour including customer tips are not the same thing.

Not economically, Not contractually, And certainly not morally