Tipping reforms: Government withdrawal of draft Code leaves employers awaiting clarity

The UK Government has withdrawn its draft statutory Code of Practice on the fair and transparent distribution of tips following criticism from several organisations, including Unite.

The draft Code, which had been expected to come into force later this year, was withdrawn on 9 July without reasons being given. The withdrawal does not affect the existing statutory tipping regime, but it creates uncertainty over whether the planned October 2026 implementation of the Employment Rights Act 2025 reforms will proceed on schedule.

The withdrawn draft statutory Code was designed to update the 2024 Code of Practice on Fair and Transparent Distribution of Tips in light of the changes introduced by the Employment Rights Act 2025. Its focus was on moving employers beyond simply having a written tipping policy, by requiring them to involve workers in the way tipping arrangements are developed and reviewed. Where a recognised trade union or worker representatives were in place, consultation would have taken place through them, otherwise, employers would have been expected to consult workers directly.

Industry bodies have called for urgent clarification, while Unite and others criticised the draft framework for requiring consultation without giving workers ultimate control over tip allocation. Although the detail of any revised Code may change following further consultation, the direction of travel remains clear: employers should expect greater scrutiny of tipping policies, worker consultation and transparency around how tipping decisions are made.

What should employers be doing now?

Employers should continue to comply with the existing statutory 2024 Code and monitor developments closely. The Government has confirmed that a further public consultation will take place, with timing to be confirmed. Until there is further clarity, employers should avoid assuming either that the planned reforms have been abandoned or that implementation will definitely proceed on 1 October 2026.

This update contains general information only and does not constitute legal or other professional advice. For further information and advice on this topic, please contact a member of our Employment Team.