Tips, troncs, and the new code: what hospitality employers need to know

Since October 2024, UK law has required employers to pass on every tip in full to the people who work for them, share tips fairly, keep a written tipping policy, and keep records staff can see. A revised code of practice will add a duty to consult your team when you create or change your tipping policy, and to review it at least every three years. It was expected in October 2026 and is now due by the end of the year. A fair, written, well-explained policy covers you under both.

Position as at 30 October 2026: the revised code has not yet been approved by Parliament. I will update this guide when it is.

What the law already requires

The Employment (Allocation of Tips) Act has been in force since 1 October 2024. If you take tips, whether by card, as a service charge, or in cash you control, you must:

• Pass on all qualifying tips in full, with no deductions for card fees or admin.
• Allocate them fairly among the people who work for you, including agency staff.
• Pay them out by the end of the month after the guest paid them.
• Have a written tipping policy and make it available to staff.
• Keep records of tips received and how they were shared, and show them to any worker who asks.

The existing statutory code of practice explains what "fair" means. You must have regard to it, and a tribunal will.

What the revised code adds

The Employment Rights Act 2025 strengthens the rules, and a revised code will set out how to follow them:

• Consult before you decide. When you create a tipping policy or change it substantially, you must consult your workers: through a recognised union, elected representatives, or the staff directly if there are none. Afterwards, you must give them an anonymised summary of what they said.
• Review every three years. Each policy must be reviewed at least once every three years, with the same consultation.
• Be careful with fixed shares. The draft code warns that fixed, minimum, or guaranteed allocations to particular roles may be unfair, because they shift the ups and downs of tipping onto everyone else. Shares should rest on objective factors.

The revised code has had a bumpy journey. A draft was published in June 2026, withdrawn in July, reissued for consultation in August, and the consultation closed at the end of September. It now needs Parliament's approval before it comes into force, expected by the end of 2026.

How to get it right

You do not need to wait for the code to do the right thing.

• Write it down plainly. Who shares in the tips, how the shares are worked out, when they are paid, and how service charge is treated. If a new starter cannot understand it in five minutes, rewrite it.
• Ask the team now. Hold a short, genuine conversation about how tips should be shared, and write down what people said. When consultation becomes a legal duty, you will already be doing it.
• Base shares on something you can explain: hours worked, role, or a points system everyone understands. Avoid arrangements that quietly favour the owner's friends or the longest-serving staff.
• Show the numbers. Make the records available without being asked. Nothing damages trust faster than a team that suspects the tips are going somewhere else.

A fair tipping policy is not just compliance. In a tight labour market, it is one of the clearest signs to your team that the rules are applied fairly, and one of the reasons good people stay.

This is general information, not legal advice. Take advice on your own policy and on how service charges are treated for tax.

If you would like help writing a tipping policy and a pay structure your team will trust, Run includes it.