A new obligation to consult on tipping policies and an updated Code of Practice on Fair and Transparent Distribution of Tips is expected to come into effect in October 2026. What do employers need to do to prepare?
In recent years, there has been a consistent direction of travel towards more transparency and less employer discretion on how tips should be distributed. Since October 2024 employers have needed to ensure that workers receive in full all tips, gratuities and service charges (which we shorten to “tips” throughout this insight).
The Employment Rights Act 2025 introduces more robust obligations for employers, aiming to put “more money into working people’s pockets”. Earlier this year, the government launched a consultation which looked at how they could implement the Act’s new requirement to consult about tipping practices. The government have now responded to the consultation and published an updated draft statutory Code of Practice.
We look at what the current law is, what is expected to change, and practical steps employers can take now to prepare.
Employers are required to pass all qualifying tips on to workers. This includes all employer-received tips and tips where the employer exercises control over how they are shared. This would include, for example, discretionary service charges automatically added to a customer’s bill.
It doesn’t matter how the tip is paid – it could be by card, cash or an app. It is the...
The U.S. Department of Justice has charged more than 450 people — including a few Georgia residents — in connection with global health care fraud schemes totaling a record $6.5 billion.