By Jo Seery, Professional Support Lawyer
The government has launched a consultation on a revised statutory Code of Practice on the fair and transparent distribution of tips, as part of its wider Make Work Pay agenda. The Code is amended to take into account new obligations on employers under the Employment Rights Act 2025 (‘ERA’) to consult recognised unions and worker representatives when developing, reviewing or changing written workplace tipping policies. The government says this will give workers a greater say in how tips, gratuities and service charges are distributed, while helping to ensure tipping arrangements remain fair and transparent.
The revised code emphasises that consultation on how tips are allocated should be genuine, considered and conducted in good faith and not just a paper exercise. Although the Code does not go so far as to set out in detail a timetable or what consultation involves, it states that consultation should take place at work and can take place as part of collective bargaining. Workers should give enough information to enable a genuine agreement to be reached on a fair and clear method of distribution. It warns against employers or managers using coercion or an approach which may directly or indirectly discriminate such as where fewer tips are allocated to certain workers. A written record of the consultation should be kept by employers and provided to workers (suitably anonymised). Additional information on the process of consultation is to be set out in further accompanying non-statutory guidance.
To meet the statutory duty to review the tips policy at least once every three years, the Code suggests this should be more regular where there is high staff turnover.
The consultation closes on 29 September 2026 and provides Unions a good opportunity to focus on increasing worker influence through the new consultation requirements. Once finalised, the revised code will be laid before Parliament for approval. Regulations implementing the duty on employers to consult and review the written tips policy are expected at the end of the year.
