5 things you should know about the government’s draft tipping code

Tipping rules could be about to get more complicated. The government has recently re-released its draft revised Code of Practice around tipping, after unexpectedly withdrawing it in July – just weeks after first publishing it, and only months before the new rules were due to take effect in October.

With the new rules expected to come into place by the end of the year, now is a good time to understand how the potential changes could affect the way your business handles gratuity. To save you from wading through the fine print, we’ve asked the experts and summed up five key details that could have the biggest impact.  

The re-released draft is largely unchanged from the one withdrawn in July, but nothing is written in stone. The draft Code is currently in consultation, so if you want to tip the scales, you can send feedback to the Department of Business and Trade any time before September 29.

1. You have to consult your workers before changing your tipping policy

Under the current tipping rules, employers have to allocate tips fairly and keep a written policy. However, there is no formal requirement to involve staff in how that policy is shaped – but that’s about to change.

The draft Code makes consulting workers a mandatory part of the process. As Simon Bocca, Founder and CEO of the cloud-based payroll software platform PayCaptain tells us, businesses will now need a “a written, consulted-on tipping policy”.

Gillian Wright, Co-founder of tronc management software JustTip echoes this point, adding that businesses should “start thinking about how you would run a worker consultation, because that duty is coming, and it is new law, not just guidance.”

2. You need to review and keep records of your tipping policy on a recurring basis

Once the new Code is in place, tipping policies will need to be reviewed periodically. In practice, this means employers will need to revisit their tipping policy at set intervals, keep working in the loop each time, and keep a documented trail of the process. 

The good news is that a lot of this grunt work can be automated. “The parts that feel like a burden,” like “running a worker consultation and keeping a record of it”, “reviewing the policy on schedule”, and “holding tipping records for three years,” are “exactly the kind of admin that technology should take off an owner’s plate,” Wright from JustTip explains.

3. App and QR tipping isn’t automatically exempt

The tipping draft closes the relabeling loophole. This means that however gratuity is collected, whether it be through an automatic service charge, a card tip, or through a QR code at the table, all tips are still subject to the new rules. 

Bocca from PayCaptain stresses this detail, explaining that businesses may need to audit the pay they handle app-based and QR tips, as “allocation rather than payment method determines whether it’s in scope”.

In practice, this may mean going back over existing digital tipping setups to check how the money is split, rather than assuming it’s already compliant with the new rules. 

4. Fixed tip shares for senior staff should be avoided or justified

Small hospitality businesses often run on informal understandings. For example, chefs may always get a cut based on a fixed percentage agreed verbally years ago. 

The draft Code pushes back on this, and broadens who should be considered part of the tipping pool in the first place. Under the potential new rules, back-of-house staff will need to be included in the pool, not just workers who deal with directors face-to-face.

This new detail aims to close off unexamined allocations that can expose businesses to equal pay or indirect discrimination claims, and expects businesses to justify the fairness of their scheme as a whole. 

5. Troncs aren’t a hands-off solution

Similar to collecting tips via automatic service charges or QR codes, a tronc doesn’t automatically take the liability off your plate. 

As Wright from JustTip clarifies: “A lot of owners assume that once tips go into a tronc, the liability goes with them. Under the Act, and now this draft Code, that is only true if the tronc really is independent and well run, with the employer staying involved where necessary, checking in on the arrangement rather than walking away from it entirely.”

This means that instead of assuming the label alone covers you, employers will soon need to look closely at how independent their tronc arrangement really is to ensure they adhere to the rules.

Have thoughts about the new Code? The government wants to hear from you

If you don’t like the sound of the proposed changes, the good news is you don’t have to grin and bear it. The government has opened a consultation on the draft Code, opening the floor for hospitality businesses to voice their opinions until the 29th of September. 

As Ben Thomas, CEO of TiPJAR, tells us, the feedback that is received will “help shape how the Code works in practice, reducing uncertainty, creating a level playing field, and making it easier for operators to run fair and transparent tipping processes with confidence.”

Small venues are being specifically encouraged to take part, as the government tries to ensure the Code works for businesses of every size. So, if you want your voice to be heard, now is the time to act.