Tipping Compliance: What the Withdrawal of the Draft Code Means for Employers
Comment from Mark Taylor, Partner and Head of Buzzacott Troncmaster Services (www.buzzacott.co.uk/troncmaster)
The Government has withdrawn the draft revised Code of Practice on tips without explanation, creating uncertainty around proposed worker consultation requirements. However, the current tipping regime remains fully in force and hospitality businesses should not assume that future reforms have disappeared.
When the Employment (Allocation of Tips) Act 2023 came fully into force on 1 October 2024, it introduced the most significant changes to workplace tipping practices for decades.
Employers became legally responsible for ensuring that qualifying tips, gratuities and service charges are distributed fairly and transparently, supported by a statutory Code of Practice explaining how those principles should be applied in practice.
Earlier this year, the Government consulted on proposals intended to give workers a greater voice in the development and review of tipping policies. The subsequent draft revised Code of Practice, published on 29 June 2026, indicated that worker consultation would become a formal part of tipping governance and that tipping policies would be reviewed periodically, at least every three years.
However, less than three months before those proposals were expected to take effect, subject to Parliamentary approval, the Department for Business and Trade withdrew the draft Code without providing any public explanation.
The withdrawal has understandably left many hospitality businesses wondering what happens next.
The current law remains unchanged
The most important point is that nothing about the withdrawal changes the existing legal obligations introduced in October 2024.
Employers must still:
• Pass qualifying tips, gratuities and service charges to workers in full.
• Allocate tips fairly and transparently.
• Maintain a written tipping policy.
• Keep appropriate records.
• Provide information to workers upon request.
• Ensure fairness even where tips are distributed through an independent tronc arrangement.
Businesses should therefore avoid viewing the withdrawal as a relaxation of the current compliance regime.
What does the withdrawal mean?
At the time of writing, the Government has not publicly explained why the draft Code was withdrawn.
What is clear is that the proposals attracted criticism from different parts of the sector. UKHospitality questioned whether further changes were necessary so soon after the October 2024 reforms, while Unite argued that the proposals did not go far enough in giving workers control over tipping arrangements.
Despite the withdrawal, the Government has continued to indicate that it wishes to strengthen worker involvement in tipping policies. As a result, the underlying policy objective appears unchanged, even if the draft Code itself has been removed.
For that reason, businesses should be cautious about assuming that worker consultation requirements have disappeared permanently.
Why now is a good time to review existing policies
One of the most useful messages contained within the withdrawn draft Code was that tipping policies should not become static documents.
Many hospitality businesses implemented policies before October 2024 and have not reviewed them since. During that time, businesses may have experienced:
• Changes in management structures.
• New sites or venues.
• Changes to service charge arrangements.
• Increased use of digital tipping platforms.
• Changes in workforce composition.
• Changes to tronc governance and allocation methodologies.
Even where no formal review requirement currently exists, these developments can create a disconnect between written policies and day-to-day operational practice.
A policy that was appropriate in 2024 may no longer accurately reflect how tips are distributed in 2026.
The key message
The withdrawal of the draft revised Code undoubtedly creates uncertainty. However, uncertainty should not be mistaken for deregulation.
The October 2024 tipping regime remains fully in force, and the Government has not abandoned its stated objective of increasing worker involvement in tipping arrangements. Whether that ultimately results in a revised Code, further guidance or another approach remains to be seen.
In the meantime, hospitality businesses should continue to focus on compliance, transparency, and effective governance of their tipping arrangements.