If you run a pub, restaurant, hotel, salon or anywhere else that takes tips, you’ll already know the Employment (Allocation of Tips) Act 2023 became enforceable on 1 October 2024. Almost two years on, it’s worth a proper look at what’s happening now, what hasn’t moved an inch, and what’s genuinely up in the air.
What the Act actually requires
None of this has changed since day one, and it isn’t about to. If you receive tips, gratuities or service charges more than occasionally, you need to:
Pass on 100% of qualifying tips, with no deductions beyond what the law requires (income tax and, where it applies, National Insurance).
Allocate them fairly, not necessarily equally, but with regard to things like role, hours and seniority.
Pay them out by the end of the month following the month they were received.
Keep a written tipping policy and clear records, and provide a summary to any worker who asks for one, once every three months.
Retain records for at least three years.
Qualifying tips count as wages in law, which pulls them into the unlawful deductions regime. Workers have 12 months to bring a tribunal claim if something goes wrong.
What hasn’t changed
It’s easy to assume “reform” means the old rules get relaxed. They haven’t.
The 100%-to-workers rule is untouched. Independent troncs are still a recognised, efficient way to allocate tips fairly, as long as the
Troncmaster genuinely keeps independent discretion over who gets what.
The 12-month tribunal window and the wages treatment remain exactly as they were.
Enforcement now sits with the Fair Work Agency, which launched in April 2026 with real powers and a real budget. That’s a strengthening of oversight, not a change to the substance of the law.
If you got your house in order back in 2024- written policy, fair allocation method, clean records- that work still stands.
The bit that was supposed to change
The next layer of reform comes via the Employment Rights Act 2025, which looks to give workers a say in how tipping policies are made, not just how the money gets split.
Following a government consultation that drew 95 responses from employers, unions, workers and tronc operators, ministers published their response in June 2026 alongside a draft revised Code of Practice.
The headline change would have been a legal requirement to
- Consult workers, or their representatives, before introducing or reviewing a tipping policy
- Reviews at least every three years
- Genuine engagement rather than a tick-box exercise
- A duty to publish an anonymised summary of feedback.
This was due to take effect in October 2026.
Then in late July, less than three months before the new consultation rules were due to land, the Department for Business and Trade withdrew the draft revised Code of Practice, without giving a public explanation.
Reports suggest the proposals had drawn criticism from both sides.
- UKHospitality questioned whether more change was needed so soon after 2024’s reforms.
- Unite union argued the plans didn’t go far enough in giving workers real control.
Whatever the reason, the withdrawal doesn’t touch the existing law. Full payment, fair allocation, written policy, records, all of that stays exactly as it is.
What’s genuinely uncertain is whether the October 2026 consultation requirement turns up on schedule, in a different form, or not at all.
What this means for your business now
Don’t read the withdrawal as deregulation, and don’t wait for certainty before tidying up.
Treat your existing obligations as fixed. Nothing about the withdrawal changes what you’re legally required to do today.
Dust off your tipping policy anyway. Plenty of businesses haven’t looked at theirs since 2024, even as venues, digital tipping platforms, management structures and workforce make-up have all shifted. A policy that was fine in 2024 may not reflect how tips actually move through your business in 2026.
Consider carrying out the consultation now. You don’t need a legal mandate to have a proper consultation with staff about how tips are allocated, and genuine engagement is clearly the direction of travel. The law will still require a consultation; all that is missing is a firm date for when employers must carry it out.
Keep an eye on the tronc and tax interaction. If consultation requirements do return, there’s a live question about how worker consultation sits alongside the National Insurance exemption for independent tronc arrangements. Our steer would be to keep any consultation to broad principles, which tips qualify, general fairness criteria, and leave individual allocation decisions to the Troncmaster, so the exemption isn’t put at risk.
Watch this space on what “fair and transparent” actually means. It isn’t quantified anywhere in the legislation, and we don’t expect that to change unless and until a case is taken before the Tribunal system.
Where Tips and Troncs can help
Two years in, the core of the Act has bedded in and isn’t up for debate. Tips get passed on in full, allocated fairly, paid on time, and properly documented. The next layer, formal worker consultation, just hit a genuine, unexplained pause. The safest assumption for anyone handling tips right now is that the direction of travel hasn’t reversed, even if the mechanism and date are back up in the air.
If you’d like a hand reviewing your tipping policy or tronc arrangements before the picture becomes clearer, get in touch.