Tipping policies need union or rep consultation from 1 January 2027

Hospitality, leisure and other tipping employers face a fixed start date for new consultation duties. From 1 January 2027, employers must consult before creating a tipping policy and before every review of itAcas. The previous formulation of coming into effect by the end of 2026 is replaced.

Consultation must be with representatives of an independent trade union recognised in respect of affected workers, or with appointed or elected worker representatives with authority to be consulted on the policy, and only directly with affected workers where there are no such union or worker representatives.Legislation Direct consultation with workers is therefore narrowed to workplaces without recognised unions or representatives.

Employers must also make an anonymised summary of views expressed in the consultation available to all workers at the place of businessLegislation, and must review the written policy at least every three yearsLegislation. The first three-year period runs from the day the first version was made available, even if that day predates the new review dutyLegislation, with each later review no more than three years after the previous oneLegislation.

The duties sit on top of the Employment (Allocation of Tips) Act 2023, known as the Tipping Act 2023. It applies to tips, service charges and gratuities over which the employer has control or significant influence, including service charges added to bills and tips that pass through the employer for division.Acas Employers must pass those sums to workers without deductions other than usual tax and National InsuranceAcas, share them fairly and transparently following the statutory Code of Practice on fair and transparent distribution of tipsAcas, and keep a written policy and recordsAcas. The Code is the minimum procedure.

Cash left on tables or in jars that workers keep without employer control falls outside the Act and CodeAcas, though good practice is to explain the process and tell customers what happens. Card payments to the employer, including via issuers or schemes, are coveredAcas, while payments direct to the worker are notAcas. App tips paid direct to a driver are outsideAcas, and only divisible or monetisable gifts are covered.

Tips must reach workers no later than the end of the month after receipt.Acas A restaurant receiving service charges in July must pay them before the end of August. Where a tronc pools tips, the employer must still ensure the system was set up fairly and follows the CodeAcas, and must act if told or suspecting unfair sharing or deductions, by raising concerns, changing the troncmaster or ending the arrangementAcas.

Tips do not count towards the minimum wage and cannot top pay up to it.Acas Workers can raise underpayment informally, through the grievance route following the Acas Code, with the Acas helpline, by complaining to HMRC on minimum wage, or by claiming in an employment tribunal, where a successful claim can lead to action for other affected workers.

Employers with tipping policies should map recognised unions and elected representatives now, build direct-consultation lists only where none exist, and set a three-year review cycle with anonymised feedback.

The legal basis is the Employment (Allocation of Tips) Act 2023 with the statutory Code of Practice on fair and transparent distribution of tips, and section 14 of the Employment Rights Act 2025 amending section 27I of the Employment Rights Act 1996Legislation on consultation, anonymised summaries and three-year reviewsAcas.