Employment Rights Act: Tipping

If you operate in hospitality, leisure or any environment where tips form part of workers’ income, this one needs to be on your radar. 

The Employment Rights Act is tightening expectations around how tipping policies are created and reviewed. 

What is changing and when? 

From October 2026, employers will be legally required to consult with workers when developing or updating their tipping policies. 

This consultation must involve: 

• Recognised trade union representatives, where applicable 

• Other elected representatives, where they exist 

• Or directly with workers if there are no representatives 

This is not a tick-box email. It must be a genuine consultation. 

Employers will also be required to: 

• Review their tipping policy at least once every three years 

• Share an anonymised summary of the views expressed during consultation with all workers at the place of business where the policy applies 

And there are consequences. 

If an employer fails to consult properly, workers can bring a claim to an employment tribunal. A tribunal can award up to £5,000 for financial loss attributable to the failure. 

What does this mean for your business? 

If you already have a transparent, fair tipping process, this should not feel dramatic. 

But if your tipping arrangements are informal, inconsistently applied or poorly documented, this is a clear signal to tighten things up. 

The key themes here are transparency and fairness. 

Employees must understand: 

• How tips are distributed 

• Who is included 

• How decisions are made 

• And how their views have been considered 

How should you prepare? 

Now is the time to get ahead of this before October 2026 rolls around. You should: 

• Review your existing tipping policy. Is it clear, up to date and reflective of how things actually work in practice? 

• Sense-check your consultation processes. Do you have a framework for meaningful consultation if required? 

• Document your approach. If challenged, you need evidence of genuine consultation. 

• Brief your managers. They must understand both the current tipping arrangements and the new consultation obligations. 

If you do not currently have a formal tipping policy, this is your cue to create one. 

Final thought 

This change isn’t about catching businesses out. It is about fairness, clarity and giving workers a voice in decisions that directly affect their pay. 

Handled well, this is an opportunity to strengthen trust. 

Handled poorly, it becomes avoidable tribunal risk. 

At Streetwise HR, we help businesses review their tipping arrangements, design consultation processes that actually work and ensure policies are practical, compliant and culturally aligned. 

If you would rather sort it properly now than defend it later, let’s talk.