The Employment (Allocation of Tips) Act 2023, introduced a host of obligations on employers with workers who receive tips, including an obligation to ensure a fair allocation of qualifying tips amongst the workers and to ensure that tips are paid in full to workers. 

The Government now intends to make changes to the tips regime, placing further demands on employers in industries involving significant tips and has issued a consultation on the changes. 

The Government has published a consultation paper on: 

• New obligation on employers to conduct a consultation process regarding tips policy – There are new requirements in the Employment Rights Act 2025 to consult workers on tips policies prior to implementing the policy and every three years thereafter.
• Tips Code of Practice – Inviting views on how the existing legislation and the “Statutory Code of Practice on Fair and Transparent Distribution of Tips” are working in practice. 

This forms part of the broader "Making Work Pay" agenda and builds on the framework already established by the Tips Act.

Timeline

The consultation closes on Wednesday 1 April 2026. 

It is expected that the new legal requirements and updated Code will come into effect in October 2026, although the exact arrangements will be confirmed in due course. 

What should employers be doing now? 

• Audit your current tips policy and process: review whether current practice meets the existing requirements under the Tips Act, and whether it ready to withstand the new consultation obligations.
• Consider the broader payroll picture: review how tips are currently being processed and consider the implications regarding the treatment of tips for the purposes of national insurance contributions and holiday pay calculations.
• Consider responding to the consultation - if you operate in a tipping-heavy sector, this is a genuine opportunity to influence how the new framework is shaped in practice. Responses are due by 1 April 2026.

Feel free to reach out to the Deloitte Fair Pay Team if you would like to discuss any of the above.

Amy Douthwaite - adouthwaite@deloitte.co.uk 
Kathryn Dooks - kdooks@deloitte.co.uk
Natalie Bell - nbell@deloitte.co.uk  
Helen Kaye - hkaye@deloitte.co.uk 
Ben Baldwin - benbaldwin@deloitte.co.uk