The Government’s latest proposed changes to the legal tipping framework seek to give workers a greater say in how tips are distributed. The Government withdrew the previous draft revised Code after it attracted widespread criticism from trade unions earlier this year.
A further draft has now been published, and stakeholders have been asked for their views.
There is currently no need to change existing tipping arrangements to reflect the proposed new requirements and employers should continue to comply with the existing laws. Employers will be well advised, however, to consider preparing for further changes later this year.
What are the current rules?
The Employment (Allocation of Tips) Act 2023, introduced by the Conservatives, provided new protections for workers receiving tips, gratuities and service charges.
The Act provides that employers must ensure qualifying tips are passed to workers in full. Those whose staff receive tips on a regular basis must also have a written tipping policy, clearly explaining how tips will be dealt with and distributed.
The statutory Code of Practice on the fair and transparent distribution of tips came into force on 1 October 2024. It sits alongside the 2023 Act, providing guidance for employers as to how tips are allocated and the factors that should be considered when deciding whether an arrangement is fair
What was the Government proposing?
The Employment Rights Act 2025 builds on current tipping legislation by introducing a requirement for employers to consult workers when developing or reviewing written tipping policies (which must be done every three years) and provide a written anonymised summary to workers of the views expressed in the consultation.
The stated aim is to ensure workers have greater control as to how their tips are distributed. The details as to how these new provisions should work in practice are to be set out in an updated version of the statutory Code of Practice and it was that which the Government consulted on earlier this year, between 5 February and 1 April 2026.
See our earlier ERA Series Insights on:
Criticism following the first consultation
On 29 June this year, the Government published its response to the consultation alongside a draft revised statutory Code of Practice. The draft contained guidance as to how employers should consult workers when deciding on tip distribution arrangements, and the factors to consider when deciding whether the distribution of tips is fair.
The proposed changes attracted widespread criticism, particularly from trade unions. Unite was especially critical of the Government's approach, arguing that simply asking workers for their views was not enough. Unite pointed out that despite the Government’s previous promise to give workers full control of tip allocation, the final decision was ultimately still in the employer’s hands.
As a result of this pushback, in August 2026 the Government withdrew the draft revised Code and produced another, upon which it commenced another consultation process.
What happens next?
On 19 August 2026, a new draft revised Code was published and a further six-week consultation was launched providing another valuable opportunity for parties to have their say on how the revised rules should work in practice. The consultation will end on 29 September 2026.
After that, unless there are further surprises, the government will produce a response to the consultation and finalise the revised draft statutory code, which will then be laid before parliament for approval before being brought into force.
The Government had originally planned for the new requirements to come into effect in October 2026. However, after the recent withdrawal of the draft Code, and the ongoing further consultation, this timeline has been pushed back. While the Government still plans for the changes to take effect before the end of this year, the exact date is unknown.
Comment
The new revised draft Code has already attracted criticism, with some pointing out that very few substantial changes have been made. With so few changes, it will be interesting to see how trade unions now respond to the latest draft.
The withdrawal of the draft Code has created some uncertainty for employers as to how they will be expected to implement fair tipping in future. Employers are advised to monitor any further developments closely. In the meantime, until the updated rules successfully make their way through parliament, the existing law remains in place.
Links to the consultation and the revised draft Code of Practice are available via the government’s webpage.
Previous insights in our ERA Series
Employment Rights Act Series: A big consultation on ‘little’ things – zero and low hours and short notice (Principal Associate, Suzanne Nulty and Partner Meredith Hurst) 8 July 2026
Employment Rights Act Series: Protected Disclosures: Sexual Harassment (Partner, Saira Ali) 30 April 2026
Employment Rights Act Series: Further consultations on redundancy, industrial action, and agency work (Principal Associate, Louise Singh) 30 March 2026
Employment Rights Bill Series: Amendments to zero-hours contracts provisions (Principal Associate, Suzanne Nulty) 29 April 2026
Employment Rights Act Series: April 2026 changes spring into force – practical considerations for employers (Partner, Mark Landon and Principal Associate, Suzanne Nulty) 27 March 2026
Employment Rights Act Series: Further consultations for Spring 2026 (Principal Associate, Louise Singh) 25 February 2026
Employment Rights Act Series: New trade union law now in force and updated timeline (Principal Associate, Louise Singh) 25 February 2026
Employment Rights Act Series: Redundancy collective consultation: Doubling down on recalcitrant employers by doubling up on protective awards (Principal Associate, Suzanne Nulty and Legal Director, Victoria Duddles) 29 January 2026
Hark! The Employment Rights Act 2025 is nigh… (Partner, Nick Newman and Principal Associate, Louise Singh) 17 December 2025
Employment Rights Bill Series: Four ‘autumn 2025’ consultation launched (Principal Associate, Matt Smith) 24 October 2025
Employment Rights Bill Series: Amendments to zero-hours contracts provisions (Principal Associate, Suzanne Nulty and Principal Associate, Louise Singh) 07 August 2025
Employment Rights Bill Series: Amendments to the Fire and Re-hire provisions (Legal Director, Ross Hutchison) 22 July 2025
Employment Rights Bill series | July amendments: NDA changes and more (Principal Associate, Louise Singh) 13 July 2025
Employment Right Bill Series: Implementation Roadmap – a long and winding road (Principal Associate, Suzanne Nulty and Partner, Mark Landon) 08 July 2025
Employment Right Bill Series: House of Lords Stages completed (Principal Associate, Suzanne Nulty) 26 June 2025
Employment Rights Bill Series: The House of Lords Stages so far (Principal Associate, Suzanne Nulty) 6 June 2025
Employment Rights Bill Series: Employment Rights Bill moves from Commons to Lords (Principal Associate, Suzanne Nulty) 25 March 2025
Employment Rights Bill Series continued (Principal Associate, Suzanne Nulty) 7 March 2025
Employment Rights Bill Series: Zero Hours Contracts and Guaranteed Hours: A Zero-Sum policy? (Principal Associate, Louise Singh) 27 January 2025
Employment Rights Bill Series: Small but significant changes to the statutory sick pay system (Principal Associate, Ashley Powis) 13 December 2024
Employment Rights Bill Series: First set of proposed amendments: what it means and what to expect (Principal Associate, Suzanne Nulty) 6 December 2024
Employment Rights Bill Series: Further rules on fair tipping (Principal Associate, Ashley Powis) 3 December 2024
Employment Rights Bill Series: Dismissal and Re-engagement - Tying the Hands of employers? (Legal Director, Ross Hutchison) 22 November 2024
Employment Rights Bill Series: The Fair Work Agency (Principal Associate, Suzanne Nulty) 15 November 2024
Employment Rights Bill Series: The Pendulum Swings on Industrial Relation (Partner Andrew Forrest and Principal Associate, Louise Singh) 8 November 2024
Employment Rights Bill Series: Day 1 right to claim unfair dismissal (Principal Associate, Suzanne Nulty and Associate, Lauren Barchet) 25 October 2024
Employment Right Bill Series – Flexible Working “Further Flexion” (Principal Associate, Suzanne Nulty) 21 October 2024
The Employment Rights Bill Series: 2024 – What’s in, What’s out, and What’s next (Principal Associates, Louise Singh and Suzanne Nulty) 11 October 2024
If you'd like guidance on the rules around fair tipping, please contact one of our expert employment law solicitors.