Tips & Service Charges Dispute Letter: Free Template and What to Include

If you need to challenge unlawful withholding or pooling of tips and service charges, a written letter is the recommended first step — it creates a clear record and shows you're pursuing the matter formally. Below is what a strong tips & service charges dispute should include.

What this letter needs to cover

• Describe the pooling or withholding arrangement
• State this may contravene the Employment (Allocation of Tips) Act 2023
• Request a full breakdown of how tips are distributed
• Request repayment of any tips unlawfully withheld
• Request a meeting to discuss the policy

Your rights under the Employment (Allocation of Tips) Act 2023

Since this Act came into force, employers must pass on all tips, gratuities, and service charges to workers in full, without deductions (other than tax), and must do so fairly and transparently according to a written policy. Employers can no longer simply keep a share of tips or use them to top up wages to minimum wage level.

What to include before you send it

• The specific practice you're challenging — withheld tips, unfair pooling, or deductions
• Reference to your rights under the Employment (Allocation of Tips) Act 2023
• A request to see your employer's written tipping policy, if one exists
• A request for any wrongly withheld amounts to be paid

What "fair allocation" actually requires

Tips must be distributed in a way that's fair and reasonable between workers — this doesn't necessarily mean exactly equal shares, but the method must be transparent, consistently applied, and not arbitrary. Employers must also have a written policy on how tips are handled, which staff are entitled to see.

Frequently Asked Questions

Can my employer use tips to make up my basic pay to minimum wage?
No — this practice is specifically prohibited; tips must be paid on top of at least minimum wage, not used to reach it.

What if my employer doesn't have a written tipping policy?
They're required to have one under the Act — the absence of one is itself worth raising as part of your complaint.

[Your Name]
[Your Address]
[Your Postcode]
[Your Phone Number]
[Your Email Address]
[Name of Contact / HR Department / Owner]
[Company Name]
[Company Address]
[Company Postcode]
[Date]

Dear [Name of Contact, or "the Manager"],

Subject: Formal Grievance – Tips and service charges

I am writing to raise a formal grievance about how tips and service charges are being handled.

[Choose and edit:]
• [My tips and service charges are being used to make up my pay to the minimum wage. Under the National Minimum Wage Regulations 2015, tips and service charges cannot count towards the minimum wage.]
• [Tips are being [kept by the business / deducted / shared unfairly], e.g. [describe the arrangement]. Under the Employment (Allocation of Tips) Act 2023, employers must pass on all qualifying tips, gratuities and service charges to workers in full, allocate them fairly under a written policy, and pay them by the end of the month after the month they were paid. This arrangement may break those rules.]

Please:
• Recalculate my pay so my basic hourly rate meets the minimum wage without any tips.
• Repay any shortfall, and any tips wrongly withheld, from [date] to [date or "now"].
• Send me a copy of the written tipping policy and a breakdown of how tips have been shared out.

Please treat this as a formal grievance and reply within [e.g. 14] days to arrange a meeting.

Yours sincerely,

[Your Signature]
[Your Printed Name]