1. Purpose & Scope
This protocol establishes a fair, transparent, and consistent framework for the collection, pooling, and distribution of tips, gratuities, and service charges across all restaurant locations. It is designed to be adaptable to local laws, currencies, and cultural norms, while maintaining a consistent standard of fairness and transparency group-wide.
This document does not state specific percentages, tax rates, or legal thresholds, as these vary by jurisdiction and change over time. Each location's management is responsible for confirming current local requirements before implementing or amending any tip-related policy.
2. Collection Process
All tips received during a shift — whether in cash, by card, through a digital platform, or via any other payment method — must be recorded through the designated tip-tracking system before the end of that shift.
Storage and Handling. Collected tips awaiting distribution must be kept in a secure, designated location (e.g., a locked drawer, safe, or POS-linked digital record) accessible only to authorized personnel. A clear log must be maintained showing who accessed stored tips and when.
Manager Handling of Tips. Managers may handle tip funds only for legitimate administrative purposes such as verification, reconciliation, secure storage, or distribution. Managers may not retain any portion of employee tips for themselves unless explicitly permitted under local law and clearly documented in this protocol's local addendum.
Tip Shortages & Overages. Any discrepancy between recorded and actual tip amounts must be documented immediately and reported to management. An investigation will be conducted, and any corrections will be reflected in the next distribution cycle.
3. Tip Pool Eligibility
General Eligibility. Eligibility for participation in the tip pool is determined by role, as defined in the location's staffing structure. Each location must maintain a written list of eligible and non-eligible roles, reviewed periodically to reflect any changes in local law or operational structure.
Training Employees. Employees in a formal training period may participate in the tip pool according to restaurant policy. Training employees may receive a full tip share, a partial tip share, or no tip share during observation-only shifts. The applicable policy must be clearly communicated to the employee before training begins.
Back-of-House Participation. Whether back-of-house roles (such as kitchen staff or dishwashers) may participate in the tip pool depends on local law and custom, which vary significantly. Each location must confirm whether such participation is permitted before including these roles, and document the decision in a local addendum.
4. Distribution Models
This protocol does not mandate a single distribution model. Instead, each location should select the model(s) below that best suit its team structure, service style, and local norms — and document the choice clearly in writing for all staff.
Model A — Equal Split ("Straight Pool")All tips collected during a shift are divided equally among all eligible staff on that shift, regardless of role or hours. Best suited to small teams or casual dining, where role distinctions are minimal. Can create tension if shift lengths vary significantly.
Model B — Hours-Based Pool. Tips are divided proportionally based on hours worked during the tip-earning period. Suited to teams with variable shift lengths or high turnover. Requires accurate, auditable timekeeping.
Model C — Points / Role-Weighted Pool. Each role is assigned a relative point value reflecting its contribution to guest service (for example, a server may carry a higher weight than a host). Tips are divided according to total points earned across the shift. Point values must be documented, justified, and consistently applied, and reviewed periodically for fairness.
Model D — Sales-Based Pool. Each staff member's share is based on the proportion of total sales they personally generated. Suited to service styles where individual sales performance varies widely. Often paired with a separate shared pool for support roles to maintain teamwork.
Model E — Hybrid Model A blended approach combining two or more of the above — for example, splitting the pool so that part is distributed by role/points and part by hours or sales. The exact split should be documented in writing and reviewed periodically.
Model F — Independently Administered Pool ("Tronc"-style)In some jurisdictions, tips and service charges are pooled into a fund administered independently of management by an appointed staff representative, according to an agreed formula. Where this structure is used, it must remain genuinely independent of management decision-making to retain any associated legal or tax treatment — confirm requirements with local counsel.
Model G — No-Pooling / Direct Retention. Tips are retained by the individual staff member who received them, with no pooling. Where this model is used, locations should consider whether a portion is shared with support roles (e.g., bussers, runners) to maintain fairness, where permitted.
Model H — Service Charge Distribution. Where a mandatory service charge is applied to guest bills, it may be classified and distributed differently from voluntary gratuities, depending on local law. Each location must determine and document how service charges are classified and distributed, and review this periodically as rules can change.
Distribution Formula Reference (Generic)
Individual Share = (Individual Points Earned ÷ Total Points Across All Eligible Staff) × Total Tip Pool
Where "Individual Points Earned" = Role Weight × Hours Worked (or × Sales, depending on the model selected).
Specific role weights and hours/sales figures should be maintained in each location's operational records rather than in this protocol, so they can be adjusted without requiring a full policy revision.
5. Payout Schedule
Tips collected and recorded during a defined period will be distributed according to a regular, published schedule (e.g., daily, weekly, or aligned with the regular payroll cycle). Each location must define and communicate its specific schedule.
Overtime Hours: Where overtime hours are worked, tip points should be calculated based on actual hours worked, unless local labor law requires a different treatment. Management must confirm the applicable treatment for each location.
Shift Differentials (Optional)Locations may, at their discretion, assign additional point values for shifts with unusually high demand (e.g., major events, holidays, or large group bookings). Any such differential system must be documented in writing and applied consistently.
Employee Separation: If an employee resigns or is terminated, any earned but unpaid tips must be paid out in line with the location's standard payroll schedule and any applicable local requirements regarding final pay.
6. Transparency & Record-Keeping
Record Retention Tip records — including amounts collected, pooling calculations, and distributions — must be retained for a period sufficient to satisfy local legal requirements and to allow for internal review. Each location should confirm and document its applicable retention period.
Access to Records: Employees may request a summary of their own tip calculations and distributions for any pay period within the retention period.
Audit Procedures Management reserves the right to conduct periodic audits of tip records to confirm accuracy and adherence to this protocol. Audit frequency should be defined locally and communicated to staff.
7. Fairness & Dispute Resolution
Raising Concerns: Employees who believe their tip distribution is inaccurate or unfair should raise the issue with management promptly, using the location's standard reporting channels.
Anonymous Reporting: Employees may report concerns regarding tip handling, favoritism, or suspected misconduct anonymously, where an anonymous reporting channel is available at that location.
Resolution Process: All reported concerns must be investigated within a reasonable timeframe, with outcomes documented and communicated to the affected employee(s) where appropriate.
8. Compliance with Laws
General Principle. This protocol is intended to operate within the bounds of applicable labor, tax, and employment law in each location. Where any part of this protocol conflicts with local law, local law takes precedence, and the protocol must be adapted accordingly through a documented local addendum.
Minimum Wage Interaction. Some jurisdictions allow tips to count toward minimum wage obligations, while others require tips to be entirely separate from base pay. Each location must confirm which rule applies and ensure compensation structures are adjusted accordingly. This should be reviewed periodically, as rules can change.
Tax Reporting. Employees are responsible for complying with all applicable tax reporting requirements related to tip income in their jurisdiction. The restaurant will withhold and report taxes as required by applicable local tax authorities. Specific rates and thresholds are not stated in this protocol and should be confirmed locally.
Service Charge Classification. Whether an added charge is treated as a discretionary gratuity, a mandatory service charge, or part of restaurant revenue depends on local law and must be clearly stated to guests (e.g., on menus or receipts) and documented internally.
Policy Amendments. Management reserves the right to amend this protocol when operational needs or legal requirements change. Employees will be notified of significant changes in writing, with reasonable advance notice as defined by local practice or law.
9. Tip Pool Integrity
The following actions are strictly prohibited:
Withholding tips belonging to another employee
Manipulating hours, sales, or points to increase one's own tip share
Failing to report collected tips when required
Unauthorized access to tip records
Falsifying tip distribution documentation
Violations may result in disciplinary action up to and including termination of employment, and may be reportable to relevant authorities depending on the nature of the violation and local law.
10. Exceptional Circumstances
Special Events & Banquets. For private events, catering, banquet service, or contracted group bookings, management may establish a separate tip distribution method for that event. Any alternative method must be communicated to affected employees before the event begins.
Digital and Cashless Tipping. Where tips are received via card, app, or other digital platforms, each location must specify how digital tips are pooled relative to cash tips, the timeline for including them in the distribution cycle, and how any associated processing costs are handled — confirming this against local rules, as restrictions on deducting processing fees from employee tips vary.
11. Local Adaptation Guidance
This protocol is designed as a global framework. Each location is responsible for creating a short Local Addendum that addresses, at a minimum:
Which distribution model(s) from Section 4 are used, and the specific weights, hours, or sales figures applied
The applicable payout schedule and currency
Whether back-of-house staff participate in the tip pool
How service charges (if any) are classified and distributed
The applicable record retention period
Any local legal requirements regarding minimum wage interaction, tax withholding, processing fee deductions, or notice periods for policy changes
The language(s) in which this protocol and the local addendum must be made available to staff
The Local Addendum should be reviewed at least annually, or whenever local law changes, to ensure it remains accurate. This main protocol does not need to be revised for such changes — only the relevant Local Addendum.