Government unexpectedly withdraws updated tipping code of practice

The government has unexpectedly withdrawn an updated tipping code of practice less than three months before implementation.

 

On 29 June, the government published a draft revised code of practice on fair and transparent distribution of tips following amendments made by the Employment Rights Act 2025.

 

The Department for Business and Trade (DBT) initially said the revised version would come into effect in October 2026, subject to parliamentary approval.

 

The changes were designed to mandate worker participation in the distribution of tips, with the aim of benefitting staff who have “traditionally had less of a voice in the workplace”, according to a factsheet issued by the DBT.

 

The draft revised code of practice demanded that employers consult directly with staff before drawing up their tipping policy, and that they review this every three years.

 

If an employer failed to consult properly with their workers, the workers would be able to present a complaint to an employment tribunal, which could order an employer to compensate workers by up to £5,000 under the tightened measures.

 

Previously, the act had only “encouraged” employers to consult with staff on their tipping practices.

 

The DBT stated: “In effect, the act strengthens the law by putting a clear duty on employers not just to distribute tips fairly, but to involve staff in the design and periodic review of the tipping policy – increasing transparency, worker voice and accountability in how tips are handled.”

 

However, the draft code of practice has since been withdrawn by government “with no explanation”.

 

Allen Simpson, chief executive of UKHospitality, said: "Fantastic hospitality doesn’t happen without the incredible people working in our sector.

 

“There is nothing pro-worker about excluding half a team from tips, as some organisations are suggesting. I believe that 100% of tips should be shared across the whole team, from front of house to kitchen staff. Every single person involved in delivering the hospitality experience matters and should be rewarded.

 

“We were already concerned about changing a law introduced so recently and working effectively for both teams and employers, and the withdrawal of a new code of practice just three months before its implementation leaves businesses in limbo.” 

 

He added: “Once again, hospitality businesses are left with absolutely no certainty or clarity on what is expected of them. We are pressing the government to urgently come forward with an explanation as to why the draft code has been withdrawn and how it intends to proceed with these changes.”

 

A government spokesperson told The Caterer: “It is already the law that all tips, gratuities and service charges must be passed on to the workers who have earned them, rather than being retained by employers.

 

“We promised to go further and give workers a stronger voice on tipping, and that’s exactly what we’re doing. Our Employment Rights Act will require employers to consult with workers in a meaningful way, with trade union representatives where available, when developing or reviewing tipping policies.”

 

The Employment (Allocation of Tips) Act 2023 was granted Royal Assent in May 2023 and came fully into effect on 1 October 2024, ensuring that all tips, gratuities and service charges are passed to workers.  

 

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