Your Tipping Policy Will Need to Be Consulted On: What’s Changing

If your business takes tips, this one’s worth watching — even though, unusually for this series, the final rules aren’t locked in yet and one draft has already been withdrawn and reissued. Following on from our Acas Code post earlier this week, here’s the second consultation currently open that’s worth your attention: the revised Code of Practice on Fair and Transparent Distribution of Tips.

A quick explainer of the terms you’ll see

Qualifying tips — tips, gratuities and service charges that fall under statutory tipping rules and must be passed to workers in full, without deductions (beyond those required by law).
Code of Practice on Fair and Transparent Distribution of Tips — statutory guidance on how employers should allocate tips fairly, first introduced in October 2024.
Employment (Allocation of Tips) Act 2023 — the underlying law requiring employers to pass on qualifying tips in full, allocate them fairly, and maintain a written policy.
Consultation exercise — under the new rules, a genuine process of seeking staff views before setting or materially changing a tipping policy, rather than an employer simply deciding unilaterally.

Where this currently stands

This one has had a bumpier path than most of the reforms we’ve covered. The government published a draft revised Code earlier this year, but withdrew it in July 2026 so that a fresh public consultation could be held on its content — while stating the substantive content of the revised Code “remains the same.” That consultation closed on 29 September 2026.

What’s actually being proposed

Building on the existing 2023 Act (which already requires tips to be passed on in full, allocated fairly, and covered by a written policy), the Employment Rights Act 2025 adds a new requirement:

Employers must consult workers when creating or materially revising a tipping policy — through a recognised trade union or elected worker representatives where one exists, or directly with staff where it doesn’t.
This consultation must happen at least once every three years, or sooner if the policy is reviewed before then.
An anonymised summary of the consultation must be provided to the whole workforce.

The draft Code sets out the principles employers should apply when carrying out this consultation:

Consultation should be genuine, considered, and carried out in good faith.
If workers affected by a particular tip distribution method consider it fair, that can help support a tribunal finding it fair and reasonable.
Employers don’t have to accept every proposal raised — but they do need to properly consider all views put forward.

Why “no longer deciding independently” is the real headline

The core shift here is procedural, but significant: employers will no longer be able to set or change tipping arrangements on their own say-so. Even where an employer ultimately keeps their existing approach, they’ll need to be able to show a genuine consultation happened first — not just a policy that was announced.

This was originally expected to land alongside the other October 2026 changes, but as we noted above, its operative date has since been pushed back, with the government confirming a further consultation is needed — so treat “October 2026” as no longer safe to assume for this one specifically, unlike several of the other reforms in this series.

What employers should do now

Continue following the existing 2024 Code in the meantime — nothing about your current obligations to pass on tips fairly and maintain a written policy has changed.
Start thinking about how you’d run a genuine consultation — who you’d involve, how you’d gather and record views, and how you’d summarise the outcome for the wider workforce.
Don’t assume this has been abandoned, and don’t assume it’s definitely landing on the original date either. The direction of travel is clear even though the timing has slipped.
Watch for the outcome of the current consultation, closing 29 September 2026, and the eventual confirmed in-force date.

How Cheviot HR can help

Even before the final rules land, building a genuine, well-documented consultation process around your tipping policy is good practice — and puts you ahead of whenever this reform actually takes effect. We can help you design that process and get your written tipping policy in solid shape regardless of the final commencement date.

Get in touch at heidi@cheviothr.co.uk or visit https://cheviothr.co.uk to talk through what this means for your business.