Since October 2024, employers have been required to ensure that workers receive tips in full and that they are allocated in a fair and transparent way. To assist employers in complying with their obligations, the Government produced a Code of Practice on fair and transparent distribution of tips. Under the Employment Rights Act 2025, the Government seeks to strengthen protections further by requiring employers to have a written policy in place and by introducing a statutory requirement for the employer to consult with its workers about its policy on allocation of tips. The Government therefore proposes some changes to the Code of Practice on which it seeks feedback by 29 September 2026, with the revised Code expected to come into force later in 2026. We highlight below changes in the Code that will have an important impact on employers whose workers receive tips, service charges or gratuities.
Important changes in the revised Code are:
Clarification that employers should not seek to avoid their obligations by rebranding tips, gratuities or service charges using a different label
Confirming that employers should:
Maintain a written policy on how tips are dealt with, reviewing this policy at least once every three years
Consult with workers when developing or reviewing the tipping policy (with such consultation taking place with trade union representatives where there is a recognised trade union). The consultation:
Should be genuine, considered and conducted in good...
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