Tipping practices have been subject to close focus in recent years. For workers in certain sectors, such as hospitality and leisure, tips, gratuities and service charges (which will be referred to as “tips” only in the remainder of this article) can be an important part of overall income; for customers, tips are usually paid on the assumption that the money will reach the people who provided the service.

As a result, , the employment law on tips has undergone significant change, and further reforms are once again on the horizon as part of the Government’s broader “Make Work Pay” agenda. With the Employment Rights Act 2025 (ERA 2025) set to build on the framework established by the Employment (Allocation of Tips) Act 2023 (Tips Act 2023), employers in sectors where tips are received should be reviewing their current tipping practices and preparing for what comes next.

In June 2026, the Government published its response to a consultation on strengthening the law on tipping (Consultation Response), alongside a draft revised statutory Code of Practice on Fair and Transparent Distribution of Tips (Draft Revised Code). In this article, we set out the current position, the key upcoming reforms and the practical steps employers can take to prepare for the reforms.

The Tips Act 2023, along with the current Code of Practice, which both came into force on 1 October 2024, introduced a clear statutory framework setting on the obligations of employers with regards to tips:

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