Hospitality businesses in limbo as tipping draft code is scrapped weeks before deadline

The Government has just withdrawn the draft code it was working on to bring in stricter tipper policies with no warning, leaving hospitality businesses scrambling just three months before new laws were supposed to be introduced. 

The revoked draft code built on the Employment Act 2023, which requires businesses to pass on 100% of tips to workers. The new rules, due from October 1st, would have gone one step further by making staff consultation a legal requirement when a new tipping policy is created –  i.e discussing with workers about how that total gets divvied up.

With no rulebook to follow, the trade body UKHospitality (UKH) is calling on the Government for urgent clarity on the status of the draft code, having already been concerned about the law being introduced so last minute.

Hospitality sector tips into a limbo, as the Government scraps gratuity draft code

UKHospitality is calling on the Government to urgently clarify why the draft code on tipping practices was revoked shortly after it was published earlier this year. 

With less than three months before the October 2026 deadline, UKHospitality’s chief executive, Allen Simpson, was already warning that the draft code didn’t give businesses much notice to implement the changes. 

“We were already concerned about changing a law introduced so recently and working effectively for both teams and employers, and the withdrawal of a new code of practice just three months before its implementation leaves businesses in limbo”, Simpson said in a statement from UKHospitality.

The code was meant to build on the Employment (Allocation of Tips) Act 2023, which came into force in October 2024. The Act made it unlawful for businesses to withhold tips, gratuity, and service charges from staff, requiring workers to receive 100% of tips without deductions. 

Rather than reinforcing these existing rules, the draft revised code would have gone further by making it a legal requirement for employers to consult staff before creating or updating a tipping policy.

While the Government hasn’t explained its actions, the withdrawal came after the trade union Unite called for the “flawed” code to be scrapped, over concerns that it could disadvantage lower-paid workers on insecure contracts by allowing employers to redistribute tips to offset other staff’s pay.

How to consult your staff about your tipping policy, the right way

Despite the Government’s stalling, it’s likely some form of mandatory consultation will come into place before the October 1st deadline. So, preparing a game plan before you talk to your staff is worth doing now, rather than waiting for the final go-ahead.

Start by bringing them up to date with the potential new tipping laws, and be honest about that detail not being locked down yet. Explain that the direction of travel is clear: employers will likely need to consult staff before setting or changing a tipping policy, keep a record of that consultation, and review the policy every three years.

Crucially, it’s important to mention up-front that this won’t mean they get fewer tips. With take-home pay being a huge concern for hospitality workers, stress that they will still be getting 100% of gratuity, in line with the Allocation of Tips law.

You can simply explain that the questions up for discussion are focused on the divvying-up process, i.e., how the business should split staff between front-of-house and kitchen, how the split should vary between zero-hours or full-time staff, and how card vs cash handling should be tracked and recorded. 

Successful managers understand that workers are happier, more engaged, and more productive when they feel heard. So, leading with honesty and framing this as an open discussion, rather than a top-down announcement, will make staff more likely to respond positively and keep lines of communication open in the future.