It’s been a busy eighteen months for anyone running a pub, restaurant or hotel. The Allocation of Tips Act became enforceable in October 2024. The Employment Rights Act 2025 received Royal Assent in December last year. The first wave of changes – including statutory sick pay from day one – went live on 6 April. And the Fair Work Agency, the new enforcement body with teeth, opened its doors the day after.
If you read our January piece on what the Act would mean for hospitality, you’ll already know the big-picture changes. But we’re now halfway through the rollout, and the next big milestone is just around the corner.
Here’s where things stand for tipped hospitality businesses as we head into the second half of 2026 – and what you should be putting on the agenda before October.
What’s actually live right now
Three sets of changes have already kicked in. They affect every business, but they hit hospitality operations particularly hard.
Statutory sick pay from day one
Since 6 April, the three-day waiting period has gone, and the Lower Earnings Limit no longer applies. Every eligible employee – including the hourly-paid, the casuals, and the zero-hours team members who previously fell outside the system entirely – is now entitled to SSP from their first qualifying day of absence.
For hospitality, this is one of the most expensive changes in recent memory. Short absences that used to cost nothing now trigger a payment. And the calculation is more complex too: SSP is now the lower of £123.25 per week or 80% of the worker’s Average Weekly Earnings over the previous eight weeks. For team members with variable hours, that’s an averaging exercise every time they call in sick.
The tronc angle here matters. SSP is calculated on contractual earnings only, not on tronc payments – tronc is excluded from the Average Weekly Earnings calculation because it doesn’t attract employer NICs and isn’t classed as wages. That’s a small mercy for cash flow, but it does mean your AWE workings need to be airtight if anyone ever queries them.
The Fair Work Agency is open for business
The Fair Work Agency launched on 7 April, absorbing the National Minimum Wage enforcement team, the Gangmasters and Labour Abuse Authority, and the Employment Agency Standards Inspectorate into a single regulator. It has 550 inspectors, a real budget, and a remit that covers NMW, holiday pay, statutory pay, tips and agency workers.
For tipped operators, the practical point is this – every compliance area that used to sit with a different regulator is now under one roof. NMW issues and tipping issues will be looked at side by side. If you’re investigated for one, expect questions on the other.
The Allocation of Tips Act – not new, but worth a fresh look
The Tips Act has been enforceable since October 2024, but with the FWA now active and the consultation duty coming in October 2026, this is a good moment to sense-check your tipping policy, your tronc constitution and your record-keeping. The grace period for “we’ll get to it” has well and truly run out.
What’s coming next
The next twelve months bring three big changes that will land squarely on tipped hospitality businesses.
October 2026 – the tipping consultation duty
This is the one closest on the horizon. From October, you’ll be required to formally consult with workers before you create or revise your tipping policy – and you’ll need to repeat the consultation at least every three years.
If your current tipping policy was written and signed off without proper staff input, this is the moment to fix that. The consultation doesn’t have to be drawn out, but it does need to be genuine, documented, and followed by an anonymised summary of feedback made available to the whole team.
If you operate a tronc scheme, your tronc constitution is the heart of this. The way points are allocated, how front-of-house and back-of-house are weighted, how new starters and leavers are handled, how service charges are split – all of this is in scope. A worker who believes their tips are being distributed unfairly can take the matter to an employment tribunal, and the maximum award is £5,000 per affected employee. Without a documented consultation, your defence is weak.
January 2027 – unfair dismissal at six months
The two-year qualifying period drops to six months from 1 January, with a statutory probationary period (around nine months is the figure being discussed) during which a lighter-touch dismissal process will apply. Hospitality has historically used the two-year buffer as a fallback for managing underperformance. That buffer is going.
For tipped businesses, the link to tronc is indirect but real. If a member of staff is dismissed during probation and they believe it was connected to a complaint they raised about tip allocation, that’s a different conversation entirely – tip-related dismissals can already be automatically unfair under the Tips Act.
The two pieces of legislation are starting to talk to each other.
Later in 2027 – guaranteed hours and predictable shifts
The big structural change is still to come. Workers on zero-hours or low-guaranteed-hours contracts will gain the right to be offered a contract that reflects the hours they actually work, based on a 12-week reference period. Employers will also need to give reasonable notice of shifts, with compensation due if shifts are cancelled or moved at short notice.
For a sector built on flexible rotas, this is the change that will demand the most operational thought. And it has a tronc tail to it. If a previously zero-hours worker moves onto guaranteed hours, that affects their pension auto-enrolment status, their holiday pay calculation and – if you operate a tronc –
potentially their points allocation within the scheme. None of those things break, but they all need joining up.
What it all adds up to for hospitality operators
If you take a step back, the direction of travel is clear. Workers are gaining protections faster, in more areas, and at lower thresholds than before. Enforcement is being consolidated under a single, well-resourced regulator. And the gap between “what’s written down” and “what actually happens on the floor” is the area where most operators are going to get caught out.
For hospitality businesses taking tips specifically, there are three areas that deserve close attention between now and October.
Your tronc constitution and tipping policy. If these documents were written before October 2024, or if they haven’t been reviewed since the Tips Act bedded in, now is the time. Consultation in October will be much easier if your starting point is a clear, defensible policy. A messy starting point makes for a messy consultation.
Your records. Tip distribution records, rota records, timesheet records, and absence records. If you can’t show the FWA exactly who worked when, what they earned in wages and tips, and how that compares to the agreed policy, you’re exposed. The FWA’s investigators are going to ask, and “we keep most of that on a spreadsheet somewhere” won’t cut it.
Your zero-hours workforce. The guaranteed hours rules aren’t here yet, but the 12-week reference period that triggers them is observable now. Run the numbers on your team. Who’s been working a consistent pattern? What would your tronc allocation look like if those workers moved onto contracted hours? Modelling this before the rules go live is much cheaper than reacting after.
Where Tips and Troncs can help
The Employment Rights Act is genuinely complex, and the parts that touch tipping and tronc operations are some of the trickiest to navigate. We’ve spent the last eighteen months helping hospitality operators get their tronc schemes Tips Act-compliant. The next eighteen months will be about making sure those schemes stay compliant as the rest of the Act lands.
If your tipping policy hasn’t been reviewed since 2024, if your tronc constitution is overdue an update, or if you’d like a second pair of eyes before the October consultation duty kicks in, get in touch. The earlier you start, the less painful the rest of the rollout becomes.