Deductions, hours and complaints
Tips and service charges: why they never count
Enter your hourly pay before tips, your hours and the tips paid to you: the tool shows the pay that counts once tips are set aside.
Tips do not count towards the minimum
Pay per hour that counts
£10.50
| Minimum for your age | £10.85 |
| Tips (kept, but not counted) | £60 |
| Result | £8.75 short |
Tips, gratuities, service charges and cover charges do not count towards the minimum wage, however they reach you: in cash from a customer, added to a card payment and passed on through payroll, or shared out by a tronc master. Your employer must pay the legal rate out of its own pocket for every hour, and anything customers add is on top. From 1 April 2026 that means at least £12.71 an hour at 21 and over, £10.85 at 18 to 20, and £8.00 for 16 and 17 year olds and apprentices on the apprentice rate. Take a waiter aged 19 paid £10.50 an hour for 25 hours, who also receives £60 of tips through the payslip. The payslip shows £322.50, but only £262.50 counts, which is £10.50 an hour against a minimum of £10.85. The employer owes £8.75 for that week, and the tips stay the waiter's. HMRC lists tips used to top up pay among the common causes of underpayment for apprentices.
Underpaid for this period by
£123.60
£11.93 an hour counted, against a minimum of £12.71
| Rate that applies | National Living Wage (21 and over) |
| Rates in force | April 2026 to March 2027 |
| Minimum for 160 hours | £2,033.60 |
| Pay that counts | £1,910 |
| Left out (premiums, tips) | −£40 |
| Same pay from 1 April 2027 | £203.60 short (£13.21 an hour) |
Rule applied: National Minimum Wage Regulations 2015, as HMRC explains them in its guidance on calculating the minimum wage. An estimate from what you enter, not a decision by HMRC or a tribunal.
Rates and rules read by Radif Partners · Editorial policy · Method
The rule in one line
The HMRC guidance on calculating the minimum wage lists tips, gratuities, service charges and cover charges among the payments that never count as pay for the minimum wage, and it states that the route they take makes no difference. Paid by the customer in cash, through the employer's payroll or by a tronc master, they are left out every time. HMRC also points employers to a code of best practice on how such money should be handled, but that code does not change the basic rule.
In practice the check works like this: take the gross pay for the period, remove any tips, service charge or cover charge share it contains, then divide by the hours worked. The result must be at least the rate for your age.
Two weeks on the floor, worked through
| Waiter, aged 19 | Bartender, aged 34 | |
|---|---|---|
| Hours in the week | 25 | 32 |
| Hourly wage before tips | £10.50 | £12.20 |
| Tips or service charge share on the payslip | £60 | £95 |
| Total on the payslip | £322.50 | £485.40 |
| Pay that counts | £262.50 | £390.40 |
| Minimum for the week | £271.25 | £406.72 |
| Shortfall owed | £8.75 | £16.32 |
Both workers took home more than the legal minimum once tips are included, and both were underpaid. The waiter needed at least £10.85 an hour from the employer; the bartender needed £12.71. From 1 April 2027 the gap grows, since the announced rates are £11.27 and £13.21, to be confirmed in regulations.
What keeping tips out achieves
A customer's tip comes from the customer, not from the employer paying for the work. If tips could be counted, a busy Saturday would quietly cut what the employer owed, and staff in quieter venues would carry the cost. Keeping them out means the employer's wage alone must reach the floor, and anything customers give is on top. The same logic applies to overtime and shift premiums, which are also set aside, though for a different reason.
Hospitality workers often face several of these rules at once. A uniform you pay for lowers the pay that counts, as the uniform page shows; meals deducted from wages can do the same, while meals you pay for at the till after payday do not. Add each item to the checker under the summary to see the combined effect on a single pay period.
Apprentices and young staff
In its eligibility guidance HMRC names, among the risks apprentices face, the use of customer tips to meet minimum wage pay. Young workers are exposed for the same reason: on £8.00 or £10.85 an hour, a modest tip line can make an underpaid wage look normal. The page for 19 year olds sets out the rate at that age and how an apprentice moves off the apprentice rate.
Checking and raising it
Ask for your payslip to show tips separately from wages if it does not already. Keep a note of the hours you work, including set-up and closing time, which count as working time. If the wage part divided by your hours falls below the rate, the gap is owed for each pay period affected and is recalculated at the current rate when it is repaid. The page on reporting underpayment covers asking to see your records, the free Acas helpline on 0300 123 1100 and the complaint form, which you can still use after leaving the job. HMRC's enforcement guidance explains what an inspector can require from the employer.