Legislation

Under the Government’s Make Work Pay plan, employers in England, Scotland and Wales will be legally required to consult their workers, or their workers’ representatives, when they create or review a tipping policy. This new duty is set out in section 14 of the Employment Rights Act 2025 and builds on the Employment (Allocation of Tips) Act 2023, which has required employers to pass on 100% of qualifying tips, gratuities and service charges since 1 October 2024. The Department for Business and Trade consulted on how the duty should work between 5 February and 1 April 2026, and it is expected to come into force by the end of 2026.

What does UK tipping law require employers to do now?

The Employment (Allocation of Tips) Act 2023 received Royal Assent on 2 May 2023 and came into force on 1 October 2024. It requires any employer that receives tips, or has control or significant influence over them, to pass 100% of qualifying tips, gratuities and service charges to workers, including tips distributed through a tronc. No deductions are allowed other than those required by tax law, so card fees and administration costs cannot be taken from tips.

Under the 2023 Act, tips must be allocated fairly between workers and paid no later than the end of the month following the month in which the customer paid them. A tip received on 15 June, for example, must reach the worker by 31 July at the latest.

Any business that receives tips on more than an occasional and exceptional basis must have a written tipping policy explaining how tips are distributed, and that policy must be available to all workers. Employers must also keep a tipping record for 3 years, and must respond within 4 weeks when a worker asks to see how allocations have been made. The Department for Business and Trade estimated that these rules would put around £200 million a year back into workers’ pockets.

Why does the Government say the 2023 Tipping Act does not go far enough?

The Employment (Allocation of Tips) Act 2023 places no obligation on employers to involve workers when deciding how tipping arrangements are structured. As a result, a tipping policy can still be written and amended without meaningful input from the people whose pay it most directly affects. The Government’s view, set out in its Make Work Pay: Strengthening the Law on Tipping consultation published on 5 February 2026, is that this gap needs to be closed for the reforms that began in October 2024 to work as intended.

What will the new duty to consult workers on tipping policies require?

Section 14 of the Employment Rights Act 2025 requires employers to consult workers at their place of business when developing or revising a tipping policy. Consultation must take place through the representatives of a recognised trade union, through elected worker representatives, or directly with workers where no representatives exist.

Under the Employment Rights Act 2025, employers will also have to review their tipping policy at least once every three years, consult workers again at each review, and provide a summary of the views workers expressed. The duty will be enforced through the employment tribunal, where a worker who has suffered financial loss because an employer failed to consult may be awarded compensation of up to £5,000.

How could consulting workers on tipping benefit employers?

The Government argues that consulting workers on tipping policies could prevent disputes and misunderstandings by making tipping arrangements clearer and more representative of how each workplace actually runs. A policy that staff have helped to shape before it is published is less likely to be challenged later at an employment tribunal.

Consultation could also help tipping policies to be seen as fair, particularly in hospitality, leisure and personal services. In these sectors tips can make up a meaningful proportion of a worker’s earnings, so the way tips are split has a direct effect on take-home pay and staff retention.

How will workers benefit from being consulted on tipping policies?

The duty to consult is intended to give workers greater influence over how tipping systems operate in practice. Being consulted on policy design gives staff a formal route to raise concerns about uneven distribution, the way pooled tips are shared, or the treatment of service charges added to customer bills.

The Government argues that worker consultation on tipping could improve trust and workplace relations, particularly in lower paid sectors where workers may otherwise have limited bargaining power. When the original Tipping Bill was backed in July 2022, the Government estimated that its protections would benefit more than 2 million workers, and the consultation duty extends a voice in tipping decisions to that same workforce.

When will the new tipping consultation rules come into force?

The Make Work Pay: Strengthening the Law on Tipping consultation ran from 5 February to 1 April 2026 and invited responses from workers, employers, trade unions and other interested parties. The Government has since published its response and consulted on a revised statutory Code of Practice on tipping that reflects the new consultation requirements.

As of 14 October 2026, the tipping provisions in section 14 of the Employment Rights Act 2025 have not yet come into force. They were originally expected in October 2026 but have been delayed, and are now expected by the end of 2026, with the final Code of Practice and a firm start date still to be confirmed on GOV.UK. Once in force, the changes will represent a further shift towards greater transparency and worker involvement in how pay related arrangements are managed.

Frequently asked questions about Making Work Pay and UK tipping law

Do UK employers have to consult staff about their tipping policy?

Not yet. Section 14 of the Employment Rights Act 2025 will likely require employers in England, Scotland and Wales to consult workers when creating or reviewing a tipping policy, but the duty has not come into force as of 14 October 2026 and is expected by the end of 2026.

Who must an employer consult about a tipping policy?

Employers must consult the representatives of a recognised trade union where one exists, otherwise elected worker representatives, or the workers themselves directly where there are no representatives.

What happens if an employer does not consult workers on tipping?

A worker can bring a complaint to an employment tribunal. Where the worker has suffered financial loss because the employer failed to consult, the tribunal can award compensation of up to £5,366.

Does the Employment (Allocation of Tips) Act 2023 still apply?

Yes. Every duty under the 2023 Act continues to apply, including passing on 100% of qualifying tips without deductions, paying tips by the end of the following month, keeping a written tipping policy and holding tipping records for 3 years. The consultation duty adds to these rules rather than replacing them.

Does the new tipping consultation duty apply in Northern Ireland?

No. The Employment (Allocation of Tips) Act 2023 and the Employment Rights Act 2025 tipping changes apply in England, Scotland and Wales. Employment law is devolved in Northern Ireland, so it is not covered by these reforms.

UKHospitality has welcomed the government’s decision to revise the original proposals around dismissal rights from the very first day of employment. Under what had been proposed, employees would have been entitled to claim unfair dismissal the moment they started a job. That plan has now been replaced. The qualifying period will instead be set at six months, under the upcoming Employment Rights Bill.

What’s Changed, and What Remains?

The right to claim unfair dismissal from day one has been dropped. Instead, a six-month qualifying period applies. Existing protections against dismissal on discriminatory or automatically unfair grounds (e.g. for whistle-blowing, union activity, etc.) remain in place from day one. Other “day one” protections, including statutory sick pay and paternity/parental leave, are still planned, with implementation expected in April 2026.

Industry Response

Kate Nicholls, Chair of UKHospitality, described the change as “a pragmatic step”, one that addresses a major concern for hospitality businesses. In her view, the six-month threshold is far more workable, especially for firms that hire many people on short-term or seasonal contracts. The British Beer and Pub Association (BBPA) also reacted positively. Its members had warned that offering full dismissal protection from day one could discourage hiring, especially given the financial pressures many operators already face. That said, both associations emphasised that the rest of the Employment Rights Bill still brings significant changes and urged the government to consider delaying some measures (like day-one statutory sick pay) to give businesses more breathing space in light of rising costs.

Why the Revision Happened

The proposal to grant day-one dismissal rights had become a major sticking point in parliamentary debates. Although the original goal under the Employment Rights Bill had been to deliver protections from day one, the pressure from business groups and concerns about labour market flexibility led to a compromise. Under the revised plan, the previous “two-year” qualifying period for unfair dismissal claims will be shortened to six months.

What It Means Going Forward

For workers: while the hoped-for “day one” protection against unfair dismissal didn’t survive, the reduction from two years to six months is still a meaningful improvement. Plus, the new rights to sick pay and parental/paternity leave from day one remain intact, which are important gains for many employees.

For employers, the revised approach may offer a more manageable balance between employee protections and operational flexibility. But as industry leaders have noted, the wider changes in the Employment Rights Bill will still bring extra costs, regulatory requirements, and a need for careful HR planning.

The Employment Right Bill is getting closer by the day. This landmark act will bring big changes and updates to UK employment law, starting in 2026. While it will take until 2027 for all changes to come into effect, there will be a number of laws in 2026 that you and your business need to start preparing for:

April 2026

Day One Statutory Sick Pay (SSP) 

From April 2026, employees will be entitled to statutory sick pay from the first day of their illness leave- there will no longer be a three day waiting period before they are entitled to the pay. This will come with extra payroll costs for your business, so it’s important to prepare for this now.

Day One Parental Leave

Employees will be entitled to take parental leave from their first day of employment in a job, removing the previous continuous service requirements. It is important to note that the change in legislation only affects rights to leave, not to pay.

Launch of Fair Work Agency

The Fair Work Agency will be the dedicated enforcement body for the Employment Rights Bill. The agency will have the power to inspect hospitality businesses across the UK to ensure that they’re staying compliant with the Bill, and apply any relevant penalties.

October 2026

Fire and Re-hire

In October 2026, The Employment Rights Bill will put a stop to fire and re-hire practises, whereby employers fire their employees to rehire them with new (often worse) terms of employment/contracts.

Extended Tribunal Claim Time Limits

Currently, employees have three months to file claims in Employment Tribunals. The Employment Rights Bill will increase this timeframe to six months in most cases.

Tip Allocation Rules

The Employment Rights Bill will tighten existing tipping legislation, requiring employers to consult their staff before creating a tipping policy and to re-consult with their team at least every three years. For more information on tipping legislation, see here.

The UK Government’s Employment Rights Bill is set to be the biggest overhaul of workplace protections in decades. The Bill aims to raise living standards, boost productivity, and provide greater job security for millions of workers. Here is what you need to know so far:

Key Reforms

The Bill will modernise UK employment law across multiple areas:

• Flexible Working: Employees will gain a right to request flexible working from day one, and employers must meet stricter tests before refusing.
• Sick Pay: Statutory Sick Pay (SSP) will be available from the first day of illness, removing the current three-day waiting period and the lower earnings limit.
• Parental Leave: Paternity and unpaid parental leave will become day-one rights, ending the need for months of service before eligibility.
• Unfair Dismissal: The two-year qualifying period for unfair dismissal claims will be reduced and eventually removed, giving all employees this protection from their first day.
• Zero-Hours Contracts: Workers on zero-hours or irregular contracts will gain the right to request guaranteed hours, curbing exploitative scheduling.
• “Fire and Rehire”: Employers will face new restrictions on dismissing and rehiring staff on worse terms, with many cases deemed automatically unfair.
• Harassment & NDAs: Employers will have a legal duty to prevent harassment, including by third parties, and will be banned from using NDAs to silence victims of misconduct.
• Trade Union Rights: The Bill reverses parts of the Strikes (Minimum Service Levels) Act 2023, making industrial action rules less restrictive.

Impact

For workers: this Bill promises greater security, fairer treatment, and improved work-life balance. Those in insecure roles, such as retail, hospitality, or social care, stand to benefit most.

For employers: it means new compliance challenges: rewriting contracts, updating HR policies, and budgeting for higher employment costs. The CBI warns the reforms could “damage investment and hiring,” while unions call it a long-overdue rebalancing of workplace power.

Preparing for Change

Employers should begin auditing their workforce structures, reviewing zero-hours arrangements, and training managers on the forthcoming rights. Workers should stay informed via trusted sources like Acas and review how these changes could affect their contracts and benefits.

Breakfast Briefing for More Information

We are thrilled to be sponsoring a breakfast briefing by The Caterer tomorrow, which will give more information on The Employment Rights Bill for hospitality owners in the UK! Register here.

Below are all the sections and considerations you should include when writing your businesses tipping policy, as well as best-practice suggestions to keep staff happy and fit within the “Fairness” parameters of the legislation.

Definitions in your tipping policy

• Clarify what counts as a “tip, gratuity or service charge” for your venue (cash tips, card tips, service charge added to bill, digital tips) following the guidance.
• Confirm that it applies to all workers (including zero-hours, agency, and permanent) at the venue, where the business has control or significant influence.

Allocation & Distribution

If you are using a Tronc Scheme the split allocation must be decided by an independent Tronc Master or employee tronc council and this is the criteria to be considered

• Consider criteria: hours worked, role, seniority, shift worked, etc. Make the factors clear and objective

• State when distribution happens (for instance, by the end of the month following receipt).
• Confirm that 100% of qualifying payments are passed to workers (minus any tax/NIC obligations). No deductions for business running costs, admin, etc.
• Make clear which staff are included (e.g., back-of-house vs front-of-house) and state how you handle agency staff.
• Tips collected at a specific venue must be distributed only among the staff employed at that venue and should not be shared across other locations.

Fairness & Transparency

• Explain how fairness is achieved: e.g., regular review of the allocation criteria, consultation with staff, openness on how decision-making is done

• Provide details on staff rights: they can request the tipping record, raise queries, or use internal channels to discuss concerns.
• Encourage staff involvement or representation in how the policy is applied (e.g., staff committee or meeting to discuss tronc points). This helps morale.

Record-keeping & Access

• State how the business keeps records: amount of tips received, how they were split, date/time, who got what. Must be kept for a certain period (three years recommended).
• Clarify staff rights: workers can request their own record, understand how their share was calculated, and raise a claim if they think it’s been handled unfairly.
• Say how staff can access these records (e.g., via HR, manager, digital portal) and the timeframe for requests.

Review & Governance

• Commit to reviewing the policy periodically (for example annually or every two years) to ensure it remains fit for purpose, fair and consistent.
• State who is responsible for oversight (HR, operations manager, tronc committee, independent Tronc master) and how updates will be communicated.

Tips & Tricks for Keeping Staff Happy

A great policy is one thing but making sure staff feel positive about it is another. Here are some practical tips:

• Involve your team in the design or review of the policy. Getting their input builds ownership and trust.
• Use clear language. Avoid jargon and make sure staff understand how the system works, how they benefit, and when.
• Keep administration minimal and fair. If staff feel that the system is overly complex and hard to understand morale will suffer.
• Review regularly and ask for feedback. Check if staff feel the policy is fair, if any adjustments are needed (for example with shift patterns, new roles, agency staff changes).
• Link tipping to your broader culture: show how tips recognise excellent service, align with your brand values (e.g., “We reward service excellence”) and help build a positive workplace.

Recent legal developments have put new focus on how tronc payments interact should/would factor into a hospitality worker’s holiday pay. Operators must now understand when tronc counts as “normal pay”, and how to reflect it in holiday calculations, without turning it into wages and triggering extra liabilities.

With evolving guidance and stricter fairness rules, now is the time to review tronc systems, assess risks, and ensure compliance. Here is what you need to know:

1. First things first: you don’t need to pay from the Tronc pool

The tribunal did not state that you should pay holiday pay from the Tronc pot/pay out Tronc payments to staff who are on holiday. Instead, an employer should consider Tronc income when deciding what an employee would usually make.

In short: this extra amount should not come from the Tronc pot, which should be distributed fairly between the staff that are working.

2. Separation is key, now more than ever

Processing tips, service charges and gratuities through payroll can lead to confusion and legal complications, as seen with the Tribunal. Staff need clarity and clear communication when it comes to their tips, as they make up a vital part of hospitality staff’s income.

A separate Tronc / PAYE scheme will help separate tips and gratuities from payroll. This not only saves you and your employees money, but it also provides more clarity when it comes to tips.

3. How JustTronc can help

JustTronc completely separates tips and gratuities from payroll and your business bank account. This saves you and your employees NICs on these amounts: 15% for you, and 8% for your employees.

It also keeps you compliant with the Employment (Allocation of Tips) Act 2023, and will provide more clarity and transparency for your staff, ensuring tips are distributed fairly between staff.

For more information, contact our team to get started.

Wednesday, October 1st marked the one year anniversary of The Employment (Allocation of Tips) Act 2023. This tipping act came into law in October 2024 to reform tipping practises across the UK and ensure transparency for staff.

Here’s what we have learnt one year on: 

The holiday pay confusion  

When calculating holiday pay, employers must consider a worker’s usual tronc earnings. This means that holiday pay should include an extra amount, to reflect a worker’s typical pay including tronc earnings. However, it’s important to note that this additional amount should not come from the tronc fund itself. 

This Act affects everyone

 This act doesn’t just affect big businesses; it affects operators of all sizes in the industry. 

The details matter

Ignoring smaller details, such as having an up-to-date tipping policy accessible to all your staff, is the downfall of many businesses. Clear communication with staff is key. 

The Act doesn’t only affect front-of-house staff

Some employers think that only front-of-house employees (waitstaff, bartenders, etc.) are impacted. The Act covers all employees who receive tips, including back-of-house staff, so businesses need to ensure that all team members are fairly considered in the distribution. 

Key Takeaways

The Tipping Act has been a gamechanger for hospitality employees across the UK. While it is a positive for the hospitality industry, if your business is underprepared for the act you could face legal and financial repercussions. Get in touch here to find out how we can help.

A landmark employment tribunal involving The Ivy could become one of the first major tests of the Employment (Allocation of Tips) Act 2023, designed to ensure fairness and transparency in how tips and service charges are distributed.

The case, scheduled for April 2026, stems from a waiter’s claim that he received only £97 from a £31,562 service charge pot, despite working around 2% of the total recorded hours, and therefore being owed more. He has since alleged constructive dismissal, arguing that the restaurant’s tip distribution system breached the new law.

What’s in the Employment (Allocation of Tips) Act 2023?

The 2023 Act requires:

• Fair allocation of tips and service charges among workers.
• Transparency, so employees can see clearly how shares are calculated.
• Written policies outlining how tips are managed and distributed.
• Records of all tips and service charges to be kept for three years.

For more information on the biggest mistakes made by employers when it comes to compliance with Employment (Allocation of Tips) Act 2023, take a look at our most recent blog by clicking the link here.

What will this tribunal mean for the act?

This tribunal could provide much-needed clarity on what “fair” and “transparent” actually mean in practice. For example, if a system uses a Tronc or points-based method as The Ivy does the tribunal may have to decide whether withholding detailed criteria from staff is legally acceptable.

Why does this matter beyond one restaurant?

• Legal precedent: A ruling in favour of the waiter could force hospitality businesses nationwide to review and potentially overhaul their tipping policies.
• Employee rights: It would confirm that workers have the power to challenge opaque or unfair allocations.
• Employer responsibilities: Companies that fail to provide clear explanations and fair systems could face costly claims.

The Employment (Allocation of Tips) Act 2023 was created to stop precisely the kinds of disputes now being tested in court. Whether this case results in a significant shift will depend on how tribunals interpret the legislation.

At JustTip, we believe compliance shouldn’t be complicated. Our digital tipping platform ensures 100% of tips go directly to staff, with full transparency and automatic record-keeping exactly what the law was designed to protect.

The Ivy’s tribunal may not be decided for months, but one lesson is already clear: when it comes to tips, the law is on the side of fairness.

The Employment (Allocation of Tips) Act 2023 is now in force, reshaping how UK hospitality businesses handle tips. The aim is simple: ensuring staff receive 100% of the tips they earn. However, the reality can feel confusing. Many operators are still falling into common traps, which could lead to hefty financial penalties further down the line. Here are the five biggest mistakes that business owners are making with the Employment (Allocation of Tips) Act, and how to avoid them.

1. No Written Tip Policy

The law requires every business to have a clear, written policy on how tips are allocated. This must include how tips are collected (cash, card, or both?), how they are distributed, and why. For instance, some businesses split tips by hours worked, or by seniority. This must all be in your written policy, which must be readily available and accessible for all staff.

2. Unfair Distribution

Leaving tip allocation to a manager’s discretion is no longer acceptable. The system must be transparent and demonstrably fair. This means there cannot be any preference or bias when it comes to tip allocation. A Tronc arrangement, managed independently, can make this easier.

3. Overlooking Back-of-House Staff

Tips aren’t just for servers, and the new tipping act outlines this further. Kitchen teams, baristas, delivery drivers, and cleaners may all be eligible. Excluding them can cause disputes and undermine morale.

4. Poor Record-Keeping

Businesses must keep detailed tip records of how tips have been collected and distributed for three years. This must include end-to-end transaction reports for all tips and gratuities left. Failing to do so can lead to fines and claims by employees. Digital systems simplify this by automatically tracking payments and allocations, and generating your reports for you.

5. Ignoring Technology

Trying to manage tip allocation manually is time-consuming and error-prone. Modern platforms like JustTip streamline distribution, ensure compliance, and give staff real-time visibility.

Final Thoughts

The new law is designed to protect staff and promote fairness. By avoiding these five mistakes, employers can stay compliant, improve transparency, and strengthen trust with their teams.

Check your tipping policy today and if you’d like stress-free compliance with happy staff, talk to JustTip about a smarter way to manage tips. For more information about the Allocation of Tips act, click here.

The UK Government has recently published their roadmap for rolling out the Employment Rights Bill, which will introduce new reforms and protections for workers. The House of Lords has had their fourth and final sitting to discuss this bill on the 23rd of July. This means there are now more amendments and updates on the Bill, which is continuing its way through parliament.

So, what updates do we have on the situation so far?

Shifts and Hours Worked

Firstly, they have approved an amendment that removes the bill’s mandatory requirement for an employer to offer guaranteed hours to an employee. Instead, there will be a provision in place that will allow employees to request this agreement.

A second amendment now exempts employers from paying an employee for a shift if it is cancelled with 48-hours notice.

Unfair Dismissal

The qualifying period for unfair dismissal will be reduced from two years to six months under an amendment made to the Employment Rights Bill. 

Trade Unions

New union members will be given the choice whether or not to contribute to a trade union’s political fund.

The 50% voting threshold for trade union industrial action will be reinstated.

Employee Protections

The House of Lords have voted on expansion of employee rights to be accompanied by a certified professional at disciplinary and grievance hearings.

There will be government regulations in place to strengthen protections for whistle-blowers.

Another amendment will give special constables the right to time off to carry out their police duties.

What does this mean for Employers?

While no changes have been enacted yet, it is important for employers to follow the progression of the bill and give themselves ample time to prepare for any changes that will be made. The Employment Rights Bill will be a hefty piece of legislation, that will no doubt mean big changes for the way businesses manage their staff. Staying on top of the bill now will ensure that once it is published, your business will be ahead of the curve.