The Revised Code of Practice on Tipping: What’s Actually Changing
Published 29 June 2026 | Grateful
On 29 June 2026, the Department for Business and Trade published the Draft Revised Code of Practice on Fair and Transparent Distribution of Tips, alongside its response to the consultation that ran between February and April 2026. The revised Code has been laid before Parliament and, subject to parliamentary approval, is due to come into effect in October 2026.
For anyone running a tronc, advising hospitality clients, or simply trying to keep a tipping policy compliant, this is the most significant update since the original Code came into force in October 2024. Here’s what’s changed, and what it means in practice.
Why the Code is being revised
The original Code of Practice was issued under the Employment (Allocation of Tips) Act 2023, which made it mandatory for employers to pass on all tips, gratuities and service charges to workers without deductions, and to do so fairly and transparently.
The Employment Rights Act 2025 has now gone further. It introduces a new requirement for employers to consult with workers when developing or reviewing their tipping policy, and to provide greater transparency around that process. The revised Code exists to translate that legislative change into practical guidance.
The headline change: mandatory consultation
Under the current Code, consulting staff on a tipping policy is encouraged but optional. That changes under the revised Code. Employers must consult with workers at the place of business, ideally aiming to achieve broad agreement that the system of allocation is fair, reasonable and clear, both when first developing a policy and at every subsequent review.
The Code is specific about what “genuine” consultation looks like. It must be considered and conducted in good faith, with enough time for people to actually take part, not treated as a box-ticking exercise. Importantly, the process remains advisory rather than binding: employers don’t have to act on every suggestion, as long as they can demonstrate they’ve met the underlying fairness and transparency requirements.
Where it gets more interesting is the guidance on method. The Code explicitly warns against treating a simple majority vote as the default consultation mechanism, on the basis that it can unfairly favour the largest group of workers and exclude others. Employers are expected to take reasonable steps to hear from minority groups and from workers who may be less likely to participate confidently, whether because of language, disability, cultural background, literacy or the nature of their role.
Tipping policies must now be reviewed every three years
The three-year review cycle is now a hard requirement, not a recommendation. Every review must be accompanied by the same consultation process as the initial policy development.
This matters operationally: employers (and tronc operators acting on their behalf) now need a clear record of when each client’s policy was last reviewed, and a process for triggering the next round of consultation before the three-year mark.
A new transparency obligation: the anonymised summary
This is entirely new. After consulting, employers must make an anonymised summary of the views expressed available to all workers at the place of business. The Code also expects a reasonable written record of the consultation process itself, the views raised, and the outcome.
In practical terms, this means tipping policy reviews now generate two new artefacts that didn’t previously exist: a consultation record, and a summary document for staff.
Tipping policies need new content
The written tipping policy itself must now describe not just how tips are accepted, allocated and distributed, but also the steps the employer takes to consult workers under the 2025 Act. Policy templates that haven’t been updated to reflect this will fall short of the revised Code.
New guidance on fixed or “guaranteed” allocations
The revised Code introduces a caution against allocating a fixed, minimum or guaranteed sum of tips to a named individual or category of worker in advance of distribution. The reasoning: differences in allocation between roles should come from objective, principled factors, not a pre-agreed fixed amount, because guaranteed sums for some roles can increase the variability (and risk) for everyone else sharing the pool. Guaranteed values have actually always been a no-no in a tronc scheme – tips and service charge are discretionary so a troncmaster can never really guarantee a value, and if an employer were to top-up tronc to a promised value that would invalidate the special pay arrangement that allows the NIC dispensation, by the employer indirectly influencing the scheme, however minimum or fixed values have still been a popular allocation method in tronc funds that generate large sums that can support such a practice.
This is a meaningful addition for any scheme that has historically ring-fenced a set amount for management or senior roles ahead of general distribution. This doesn’t explicitly exclude the practice, but there needs to be a clear methodology for assessing fairness in such cases, that can be evidenced if requested.
Fairness “as a whole,” not in isolated examples
The revised Code adds a new principle: when judging whether an allocation method is fair, the scheme has to be assessed as a whole, not by picking out individual cases that look generous or ungenerous. A single example, favourable or unfavourable, isn’t treated as proof of fairness or unfairness without the wider context of how the whole distribution operates.
Sharper language on indirect discrimination
The Code retains the existing duty to avoid discrimination but sharpens the warning on indirect discrimination specifically, flagging the risk when a method results in a disproportionate number of workers with a particular protected characteristic receiving a smaller share, even unintentionally.
What hasn’t changed
The core scope of qualifying tips, the rules on agency workers, the independent tronc framework and an employer’s ongoing duty to act if a tronc operator behaves unfairly, the one-month payment deadline, and the three-year tipping record requirement are all carried over largely unchanged from the 2024 Code.
The change that doesn’t get talked about enough: where someone sits versus what they do
Most commentary on this revision, understandably, lands on consultation. But buried in the same paragraph we covered earlier on “qualifying workers” is a quieter shift with bigger consequences for multi-site and group operators: the treatment of staff who don’t physically work at the trading site itself.
The concept of a “non-public place of business” isn’t new; it’s been in the legislation since 2024. What’s changed is how directly the revised Code now ties tip eligibility to physical presence and personal interaction, rather than to contribution. The test is whether someone, as part of their job, personally interacts with customers or physically and personally prepares, handles, serves or otherwise provides what the customer directly receives at that specific place of business.
Read literally, that test draws a hard line around anyone working centrally. A reservations team booking covers for a restaurant, a central training function setting service standards across an estate, a sales team driving the events business that generates the service charge in the first place. All of them shape the guest experience. Not all of them, under this wording, are personally involved in the service at the place where the tip is left, but some have arguably had a significant hand in delivering part of the service that the customer experienced.
From our perspective this change is about correctly identifying where the boundary of “place of business” actually sits for your specific operating model. A central production kitchen sending food to three sites looks very different from a finance team three floors up from the restaurant floor. One is arguably still part of delivering the dish the customer eats; the other plainly isn’t. The Code gives a principle, not a postcode, and getting that distinction right is exactly the kind of judgment call that benefits from being walked through case by case rather than applied as a blanket rule.
For any client structure that currently includes centralised roles in tronc, whether shared training functions, centralised kitchens supplying multiple sites, or cross-property administrative contributions, we will be assessing each on a case by case basis and supplying the appropriate advise and change management plan where necessary.
What this means in practice
For any employer with an internal troncmaster, or any tronc operator managing schemes on a client’s behalf, the practical to-do list ahead of October 2026 looks like this:
- Review and update tipping policy templates to describe the consultation process required under the 2025 Act.
- Build a documented consultation process for each client and each review cycle, one that doesn’t rely on a single majority vote and actively reaches workers who are harder to engage.
- Put in place a clear process for producing and distributing the anonymised consultation summary.
- Track each policy’s three-year review date so consultation isn’t missed.
- Revisit any scheme with fixed or guaranteed allocations for specific roles against the new caution in the Code.
None of this changes the fundamentals of fair and transparent tipping. It does mean the process behind that fairness now needs to be visible, documented and repeatable. That’s the shift worth preparing for now, well ahead of the expected October 2026 implementation date; suffice to say, we will be doing this for all Grateful clients!
Where this all came from: inside the government’s consultation response
The revised Code didn’t appear in isolation. It sits alongside the government’s formal response to the “Make Work Pay: Strengthening the Law on Tipping” consultation, which ran from 5 February to 1 April 2026. The response document is worth a read in its own right, both for what it reveals about how the new rules were shaped and for the signal it sends about how strictly (or flexibly) they’ll be applied in practice.
Who responded. The consultation drew 74 online responses and 21 email responses, split fairly evenly between individuals/workers (38), employers (29), and a handful of representative bodies. Over half of those who declared a sector were in accommodation and food services, which is exactly where this matters most. London and the South East were heavily over-represented, and there were no responses at all from Wales.
Customers want transparency, but don’t agree on the detail. Half of customer respondents usually tip by card, and most expect tips to be split between staff rather than going solely to the person who served them, though there’s no real consensus on the exact model. Over half said they’d like to know how tips are distributed at a business they’re tipping. The government’s response stops short of mandating public disclosure of tipping policies, but explicitly encourages employers to publish theirs where feasible.
Compliance looks strong, but the cost burden is real. Almost all employer respondents (27 of 29) believe they’re already meeting the existing duty to pass on tips without deductions. But several flagged the financial strain of absorbing card processing fees, bank charges and troncmaster costs on top of payroll. The government acknowledged this but confirmed there’s no change coming: tips must still be passed on in full, deductions for card fees included.
A real gap between what employers think happened and what workers experienced. Three quarters of employer respondents said they’d already consulted workers on tip distribution, but among worker respondents, only 5 of 19 said their employer had done so. The government called this out directly, noting the divergence “may indicate a gap between employer perceptions of consultation and worker experiences of it in practice,” and used it as a justification for why the new mandatory consultation requirement needs to come with much clearer guidance on what genuine consultation actually looks like.
The majority-vote warning appears to reflect real feedback. One multi-site operator’s submission made the case in detail: front-of-house workers, who interact directly with customers, typically outnumber back-of-house staff, and a consultation based purely on majority preference risks systematically disadvantaging kitchen and back-of-house teams who don’t get the same visibility with customers but contribute just as much to the experience.
Fixed and guaranteed allocations drew direct criticism. A tronc provider’s submission specifically criticised the practice of guaranteeing fixed tronc allocations to senior roles, arguing it creates “unfair competitive pressure in talent markets” by making such employers look more attractive to candidates.
Data protection isn’t a valid excuse for opacity. One employer’s submission put it bluntly: “If a policy cannot be shared, it is highly likely that it relies on named individuals, lacks objectivity and is not fair.” The government agreed, and the revised Code now states explicitly that data protection considerations shouldn’t be relied on to withhold information about how tips are distributed.
Confidence in enforcement is patchy. Workers expressed mixed confidence about pursuing a complaint through ACAS or an employment tribunal if something goes wrong, with several respondents requesting standardised templates and faster case handling. Some trade unions went further, calling for tipping to be brought within the remit of the Fair Work Agency so it can issue direct sanctions, rather than relying solely on the tribunal system. The government’s response commits to continued work on enforcement efficiency but does not make specific commitments at this stage.
Loopholes flagged for future guidance. Respondents pointed to several unresolved grey areas: how tronc rules interact with holiday pay (an issue already live in ongoing tribunal cases), how off-site food preparation and “dark kitchen” workers should be treated, how non-monetary tips should be handled, and how digital tipping apps fit into the qualifying tips framework. None of these are fully resolved in the revised Code itself, but the government has confirmed they’ll be addressed, where possible, in the forthcoming non-statutory guidance.
The bigger picture. Reading between the lines of the government’s response, the consistent theme is a deliberate effort to avoid being overly prescriptive. Multiple respondents, including trade bodies and individual employers, pushed back against rigid rules, warning that a one-size-fits-all model would be unworkable across an industry as varied as hospitality. The government has clearly tried to thread that needle: mandatory consultation and documentation, yes, but with broad agreement (not unanimous consensus) as the practical test, and continued flexibility for employers to design schemes that fit their own workforce.
What this means for the rollout
None of this changes the substance of what we covered above, but it does explain the reasoning behind it. The mandatory consultation requirement, the warning against majority voting, the caution on fixed allocations, and the line on data protection weren’t drafted in a vacuum. They’re a direct response to specific, named problems raised by tronc operators, a small number of employers and trade unions during the consultation.
For anyone preparing changes to processes ahead of October, that context matters. It signals that the government intends consultation guidance to be genuinely proportionate rather than a tick-box exercise, but also that it’s watching closely for exactly the kind of “majority rules” shortcut that one operator warned against. Building a consultation process that visibly reaches every group of workers, not just the loudest or largest, isn’t just good practice. It’s now the explicit standard.
This article reflects the Draft Revised Code of Practice as published on 29 June 2026, and the government’s response to the “Make Work Pay: Strengthening the Law on Tipping” consultation, also published 29 June 2026. Both remain subject to parliamentary approval. Implementation details may change before the Code comes into effect.
