From October 2026, the Employment Rights Act 2025 tightens the rules on how employers handle tips, gratuities, and service charges — building on the Employment (Allocation of Tips) Act 2023, which has required fair and full distribution of tips since October 2024.
What Is Already Law (Since October 2024)
- 100% of tips must be passed to workers without deductions (except tax)
- Tips must be allocated fairly and paid by the end of the following month
- Employers must have a written tipping policy and keep records of tip allocation for three years
- Tips cannot count towards National Minimum Wage
What Changes in October 2026
- Consultation duty — before creating or amending a tipping policy, you must consult workers or their representatives
- Three-year reviews — the tipping policy must be reviewed at least every three years, with consultation each time
Who Is Affected
Primarily hospitality, but also hairdressing, taxis, deliveries, and any business where tips or service charges are paid — including where tips are distributed through a tronc.
What to Do Before October 2026
- Diarise a consultation with staff on your existing tipping policy
- Document the consultation and any changes made as a result
- Check allocation records are complete — workers can request them, and tribunal claims are available for breaches
Our policy service can draft a compliant tipping policy and run the consultation with your team. Get in touch.