Government consults on revised tipping Code

The Government has opened a new consultation on a revised statutory Code governing the distribution of tips, gratuities and service charges.

A first consultation on tipping reforms closed on 1 April 2026. The Government published a response and draft revised Code on 29 June 2026, but withdrew that draft on 13 July following criticism from trade unions that there had not been an adequate opportunity for consultation.

On 19 August 2026, the Government reissued the draft Code and launched a formal public consultation running until 29 September 2026. The revised Code is now expected to take effect in late 2026, instead of October 2026 as originally anticipated.

The latest draft is substantially the same as the version published in June. Most of the proposed amendments are designed to reflect the new statutory consultation requirements that will be introduced by the Employment Rights Act 2025. It does not fundamentally alter the framework introduced on 1 October 2024 by the Employment (Allocation of Tips) Act 2023, but it provides more details of the new consultation requirements and emphasises greater worker participation in decisions about how tips are allocated.

What will change?

As part of its wider Make Work Pay programme, the Government committed to strengthening workers’ involvement in decisions about the allocation of tips. These reforms were enacted through section 14 of the Employment Rights Act 2025, although the relevant provisions have not yet been brought into force. 

Under those reforms, employers will be required to: 

• consult recognised trade unions or worker representatives before introducing their first written tipping policy 

• consult again whenever the policy is reviewed, which must take place at least every three years 

• provide an anonymised summary of consultation responses to workers affected by the policy. 

The revised Code is intended to provide practical guidance on how employers should meet those obligations. 

Meaningful consultation 

The draft Code states that consultation should be genuine, considered and undertaken in good faith. It should not be treated as a mere formality or paper exercise. While employers are not required to accept every suggestion put forward by workers, they must properly consider views expressed and ensure that the final arrangements satisfy the statutory requirements of fairness and transparency. 

The Code recognises that consultation may take different forms depending on the size and nature of the business. Employers may use meetings, workshops, surveys or other mechanisms, provided workers are given sufficient information and enough time to engage meaningfully in the process. A written record should be maintained and an anonymised summary shared with workers. 

Importantly, the draft warns against relying solely on a simple majority vote. Employers are encouraged to take reasonable steps to ensure that minority groups and workers who may be less confident in participating are able to have their views considered. The Code specifically identifies possible barriers arising from language, disability, literacy, cultural background or the nature of the employee’s role. 

Additional guidance on fairness

The revised draft also contains further guidance on what constitutes a fair allocation of tips.

In particular, it clarifies that decisions about which workers participate in a tipping pool should focus on those involved in providing the relevant service, rather than simply on job titles. This could include workers who directly interact with customers as well as those involved in preparing, handling or serving food, drink or other aspects of the customer experience.

The Code also cautions employers against arrangements that guarantee fixed minimum amounts of tips to particular individuals or categories of workers, noting that such arrangements may increase unfairness for others participating in the distribution.

Additional wording has been included to acknowledge that different roles may legitimately justify different levels of allocation, for example, where front-of-house and backroom staff contribute differently to the service provided. However, the overall operation of the scheme must always be considered, recognising that any increase in one group’s share will reduce the amount available for others.

What happens next?

The consultation closes on 29 September 2026. The Government will then consider responses before determining whether further amendments to the Code are required. Once finalised, the revised Code must be approved by Parliament before being brought into force alongside the relevant provisions of the Employment Rights Act 2025. The current expectation is that this will happen before the end of 2026.

The Birketts View

The practical significance of the revised Code is in the new consultation requirements rather than the enforcement mechanism or penalties, which remain unchanged. Employers will need to demonstrate they have carried out a structured, documented and inclusive consultation process.

Those hospitality businesses already operating transparent and well-documented tipping arrangements are unlikely to be required to make significant changes to their policy. However, those relying on more informal practices should review their approach before the new regime takes effect.