Since October 2023, every restaurant, cafe and pub in the UK has had to hand over 100% of tips, gratuities and service charges to staff, with no deductions for card fees, admin or anything else. If you run a restaurant, that part of the law is already settled and, for most owners, already in place. What’s changing now is how you’re allowed to decide who gets what.
The government has published a revised Statutory Code of Practice on Fair and Transparent Distribution of Tips, out for consultation until 29 September 2026, with the underlying changes due to take effect under the Employment Rights Act 2025 by the end of the year. The headline change for owners: you can no longer set a tipping policy on your own and simply announce it. Staff have to be consulted first.
What the law already requires
The Employment (Allocation of Tips) Act 2023 set the baseline that’s already in force. In practice, that means:
- All qualifying tips, gratuities and service charges go to workers in full, with no deductions beyond tax.
- Tips must reach staff by the end of the month after the one they were received in.
- Agency staff are entitled to a fair share too, paid via their agency.
- You need a written policy on how tips are allocated, and records that staff can ask to see.
If your restaurant has had a tronc scheme or a fixed tip-share rota running since 2023, most of this should already be familiar. The new Code doesn’t loosen any of it.
What’s changing next
The revised Code adds two things on top of the existing rules. First, employers will have to consult staff, or their recognised union or representatives, before introducing a tipping policy or making a material change to one — you can still decide the final policy, but the days of setting it unilaterally are ending. Second, whatever policy you land on has to be reviewed at least once every three years, not just written once and left in a drawer.
The Code’s own test for a compliant policy comes down to two words: fair and transparent. Fair doesn’t mean an equal split for everyone on shift — a reasonable method that reflects role, hours worked or seniority is allowed — but it does mean staff can see why the method was chosen and how it applies to them. The full text of the revised Code, and how the consultation is being run, is published on GOV.UK.
Getting your restaurant ready
None of this needs a solicitor’s letter to get ahead of. Before the Code lands, it’s worth: pulling out your current written tipping policy (or writing one, if you’ve been running on a verbal understanding); setting a date to talk it through with staff, even informally over a team meeting, and noting that you did; and putting a reminder in the diary to revisit it in three years rather than never. Keeping a simple, dated record of tip allocations each month covers the transparency side with minimal extra admin.
It applies whatever size the operation. A seasonal seafood shack on the Isle of Mull with three summer staff, a small hotel dining room on Iona, and a busy weekday lunch spot in Tower Hamlets are all covered by exactly the same rules — there’s no size threshold that exempts a smaller kitchen.
The mechanics of paying tips out in full haven’t changed. What’s new is being able to show, on paper, that staff had a say in how those tips are shared — and that you’ve come back to the policy since you first wrote it.
