The Employment Rights Act 2025 will provide a number of additions and amendments to existing legislation over the coming years – 2026 and into 2027. Legislation updates continue to be a focus for businesses, including those operating in the Food, Drink and Hospitality sector.
The legislation changes due to come into force in 2026 will have financial impacts including Statutory Sick Pay (SSP) – with SSP paid on the first day of absence, day one rights for leave under Paternity and Parental entitlements – as outlined in our recent blog (How HR Consultants can Guide your Business on the Legislation Updates – Employment Rights Act 2025 | Nockolds).
In addition, the government is consulting on making changes to current legislation in connection with the allocation of tips, to ‘tighten’ up the associated processes. The current legislation, The Employment (Allocation of Tips) Act 2023, came into force October 2024 and requires employers to give tips to workers without making any deductions. The code of practice associated sets out the principles to ensure that fairness and transparency applies.
Current legislation – allocation of tips
Under the current code of practice, there is a requirement for employers to provide a Tipping Policy, where tips are a normal practice. The policy outlines:
- How tips will be distributed fairly
- When the employee will receive payment e.g. made within one month following the month in which they were received
- The process the worker should follow to request a copy of their individual tipping record
Employers are required to keep a record of every tip and how it was dealt with for a period of three years.
What is planned to change – currently under consultation
Employers will be required to consult with workers before creating a tipping policy. In addition, employers will be required to update the policy every 3 years, which will include the consultation period each time.
An update on the proposed changes will be provided nearer to the time of the new legislation coming into force.
For more information on the requirements for employers to have a policy outlining their tipping procedures and the allocation, reach out to our team.