Government consults on revised tipping Code of Practice

Background

Since October 2024, employers have been required to allocate qualifying tips fairly and transparently, pass them to workers in full, maintain a written tipping policy and records, and allow workers access to those records. A statutory Code of Practice provides guidance on how employers should comply with these obligations.

The Employment Rights Act 2025 will strengthen the existing regime. Employers will be required to consult with recognised trade union representatives when developing or revising their tipping policies. Where there are no such representatives, consultation must take place with other worker representatives or directly with affected workers. Employers will also have to review their tipping policies at least once every three years and provide workers with an anonymised written summary of the views expressed during consultation.

What does the revised Code say?

Following an earlier consultation, the Government has produced a revised Code to reflect the new requirements and address issues arising from the operation of the existing tipping regime. Consultation on the revised Code is now underway.

Among other changes, the revised Code:

• Clarifies that employers should not rebrand service charges to avoid the tipping legislation;

• Strengthens guidance on identifying which workers should share in tips and discourages fixed or guaranteed allocations to particular workers;

• Provides further guidance on avoiding equal pay issues when determining how tips are allocated;

• Encourages employers and tribunals to consider the fairness of the tipping scheme as a whole, rather than focusing on individual allocations; and

• Makes clear that data protection obligations should not be relied upon unduly to withhold information about tipping records.

Employers are also encouraged, although not required, to make their tipping policies publicly available.

What happens next?

The Government will consider responses before deciding whether to proceed with the revised Code. If it does, a final version will be laid before Parliament for approval.

The new Employment Rights Act requirements and updated Code are expected to come into force later in 2026. Employers operating tipping arrangements should therefore be ready to review their existing policies and, importantly, build consultation into the process for future reviews.

For more information or advice, please get in touch with Sofia Efstathiou in our Employment team.