Hospitality Tipping Law Update: New Employer Duties from October 2026

July 8, 2026
Background

The Government has published its response to consultation, together with a revised draft Code of Practice on Fair and Transparent Distribution of Tips.

The revised Code, which is expected to come into force in October 2026 (subject to parliamentary approval), builds on the existing tipping regime by reflecting additional consultation requirements introduced by the Employment Rights Act 2025. While employers are already required to allocate qualifying tips fairly and maintain a written tipping policy in certain circumstances, the revised Code places greater emphasis on worker involvement when tipping policies are developed and reviewed.

The changes

The most significant change is the introduction of a requirement for employers to consult workers when developing or reviewing a written tipping policy.

Subject to parliamentary approval, employers will also be expected to:

  • review their written tipping policy at least once every three years;
  • consult workers whenever the policy is developed or reviewed; and
  • make an anonymised summary of the consultation responses available to workers at the relevant place of business.

Consultation should take place through recognised trade union representatives or other worker representatives where they exist. Where no representatives are in place, employers should consult workers directly.

Consultation in practice

The revised Code makes clear that consultation must be genuine, conducted in good faith and proportionate to the size and nature of the business.

This means that consultation should be more than a procedural exercise. Workers should be given an opportunity to participate and provide meaningful feedback before decisions are made.

The Code recognises that consultation may take different forms, some forms of consultation may be, hosting meetings with worker representatives and trade unions, having group discussions with employees and undertaking employee surveys. Employers are also encouraged to consider the views of all workers, particularly minority groups and those who may face barriers to participation, rather than relying solely on the views of the largest or most vocal group.

An additional compliance step

The revised Code places greater emphasis on worker engagement as part of a fair and transparent tipping process.

For hospitality employers, this means consultation will become an additional compliance step when introducing or reviewing a written tipping policy. Businesses should be able to demonstrate that workers have been given a genuine opportunity to comment on proposed arrangements and that the consultation process has been properly considered. Accordingly, documenting the process will be advantageous. The revised Code further recommends that employers not only keep a written record of the consultation process, but they should include the views expressed, the decisions taken and the outcome of the consultation.

The Code also states that where workers genuinely support a particular method of allocating and distributing tips, this may assist an Employment Tribunal when considering whether those arrangements are fair and reasonable. However, any agreement must be genuine and must not be influenced or coerced by management.

How you can prepare for the changes

Hospitality businesses should review their existing tipping arrangements ahead of the anticipated October 2026 implementation date.

When carrying out a review, employers may wish to consider:

  • whether their written tipping policy reflects current working practices;
  • how workers will be consulted when the policy is introduced or reviewed;
  • how consultation will be documented; and
  • whether existing tip allocation arrangements remain fair, transparent and clearly understood by workers.

Taking these steps sooner rather than later will help already busy hospitality employers prepare for the additional requirements reflected in the revised Code.

How we can help

Our Employment Team advises employers on all aspects of workplace compliance, including tipping arrangements and workplace policies. Our specialist Hospitality team can assist with drafting and reviewing tipping policies, advising on fair allocation arrangements, designing consultation processes and supporting employers with wider employment law compliance.

If you would like advice on preparing your organisation for the expected October 2026 changes, please contact a member of our Employment Team.

Darren Smith
Partner, Employment
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This reflects the law and market position at the date of publication and is written as a general guide. It does not contain definitive legal advice, which should be sought in relation to a specific matter.

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