This is not my ‘normal’ inciteful type of blog where I provide you, in hospitality land, my wisdom and advice on how to journey through tips, policy and tronc schemes. I am challenging the purpose of the codes (yes that is plural) of practice and what weight, if any, the code may carry.
Hospitality employers have had barely two years to bed in a tipping policy under the Employment (Allocation of Tips) Act 2023, and already a second version of the statutory Code of Practice is on the table.
The first Code came into force on 1 October 2024. A revised Code, reflecting new duties introduced by the Employment Rights Act 2025, has been through consultation and was expected to take effect around October 2026. That’s two statutory codes, two consultations and two rounds of operational upheaval inside three years, for a piece of guidance that isn’t, in itself, the law.
It’s worth asking why this keeps happening, and what it actually achieves.
The Code isn’t the law, it’s someone’s reading of the law
The Code of Practice is issued by the Secretary of State under section 27P of the Employment Rights Act 1996, as inserted by the Tipping Act. It sits alongside the legislation, not inside it. The government’s own drafting is explicit about this. The Code doesn’t set out an exhaustive list of factors, it offers overarching principles, and employers are told to have regard to it, not to obey it as if it were the statute itself.
Crucially, the government’s own published Code states that failure to fully observe it doesn’t in itself amount to proof that an employer has been acting unfairly. That’s a striking admission to find sitting inside a document meant to tell employers how to comply. If missing a provision of the Code isn’t proof of a breach, the Code is functioning as guidance on the department’s interpretation of the Act, not as a binding rulebook. Employers are still bound, in the end, by whatever an employment tribunal decides the underlying Act means when a dispute actually arises.
Separately, HMRC has issued its own non-statutory guidance on how tronc arrangements interact with the National Insurance exemption. That’s a different document again, aimed at tax treatment rather than fairness obligations, but built on the same pattern. A government body publishes its own reading of how a scheme should operate, while the legal test remains whatever a tribunal, or on the tax side a tax tribunal, ultimately says the legislation requires.
So employers are being asked to treat two overlapping sets of official guidance, one on distribution and one on tax status, as the practical rulebook, while being told that neither one settles anything conclusively if a case is contested.
If disputes are settled by tribunals, what is the Code actually for?
This is the uncomfortable part. Fairness disputes under section 27P go to an employment tribunal. NIC and tronc independence disputes go through an HMRC enquiry and, if unresolved, the tax tribunal system. In both cases, it’s a judicial body, not the department that wrote the guidance, that has the final word on what the legislation requires in a given set of facts.
That raises a fair question for anyone running a hospitality business. If a tribunal can reach its own conclusion regardless of what the Code says, and the Code’s own text concedes that non-compliance isn’t proof of unfairness, how much practical certainty does the Code actually deliver? It reads more like the government’s best guess at how tribunals might apply the law. Useful as a starting point, but not a safe harbour, and not something an employer can rely on with confidence if a genuinely contested case comes along.
Nevertheless, the Code is all we have to go on, and it needs to be considered, not in isolation, but alongside the Act and the actual practice within each hospitality business.
Why rewrite it twice, then run a full consultation each time
The first Code went through consultation from December 2023 to February 2024. Barely a year after the resulting Code came into force, a second consultation was needed, this time because the Employment Rights Act 2025 layered on new obligations: mandatory pre-change consultation with workers, a three-yearly review cycle, and reportedly a doubling of tribunal time limits from three to six months.
Each of these is a legitimate policy change in its own right. But it’s worth naming what the two-consultation pattern actually costs.
Employers absorb two implementation cycles. New policies, new training, new documentation, for what is, on the government’s own framing, non-binding guidance rather than law.
The legislation didn’t move as fast as the guidance did. The core statutory duty, pay tips fairly and transparently, hasn’t fundamentally changed. What changed is the department’s view of the process employers should follow to demonstrate it. That’s a lot of consultation machinery for a procedural gloss.
A tribunal is still free to take its own view. Running a full public consultation to refine wording that carries an express disclaimer that ignoring it isn’t proof of a breach invites the question of whether the exercise is really about improving legal certainty for employers, or about the department being seen to manage a politically sensitive area. Tipping practices attracted real public and media pressure well before the 2023 Act existed.
None of this means the underlying aim, fair and transparent distribution of tips, is wrong. It plainly isn’t. The concern is narrower. Two rounds of statutory-code consultation and reissue, layered on top of legislation that already creates a tribunal-enforced right, is a heavy administrative structure for guidance that admits, in its own text, that it doesn’t conclusively determine outcomes.
Having reviewed the consultation and responded to it, this looked more like a tick box exercise than a genuine attempt to interact with the industry and take on board the concerns put forward. What consultation process has actually resulted in changes to a code of practice? And remember, the consultation was never looking at the legislation itself.
What this means for employers right now
Treat the Code as a floor, not a shield. Following it reduces risk, it doesn’t eliminate it, because a tribunal isn’t bound to find in your favour just because you ticked every box in the Code.
Keep the paper trail regardless of which version of the Code is current. Written policy, consultation records and a clear allocation rationale matter more than matching the Code’s phrasing precisely, because that’s what a tribunal will actually look at.
Watch the date, but don’t assume the substantive obligations will change as much as the consultation activity suggests. Much of what’s coming, consultation with staff, periodic review, is process, not a new definition of fairness.
Keep tax and employment-rights compliance separate in your thinking. HMRC’s guidance on tronc independence and the NIC exemption is a distinct question from whether your distribution is fair and transparent under the Tipping Act. Satisfying one doesn’t automatically satisfy the other, and a dispute on either front ends up in front of a different tribunal.
Where Tips and Troncs can help
Guidance documents are supposed to reduce uncertainty. When a piece of statutory guidance is rewritten twice in three years, and states plainly that not following it isn’t proof of wrongdoing, it’s fair to ask whether the uncertainty has actually been reduced, or just relocated to wherever the next tribunal decision happens to land.
We help hospitality businesses build tipping policies and tronc arrangements that hold up regardless of which version of the Code is current, because they’re grounded in genuine fairness, proper consultation and a clear paper trail, not just box-ticking against the latest wording.
If you’d like a second pair of eyes on your tipping policy, get in touch.