This article was written for SLTN and appeared in the August issue of their magazine.
Employment Rights Act 2025: Have we a reprieve from Tipping Policies? And is there anything else we should be looking at?
The Employment Rights Act 2025 is set to bring an important new dimension to workplace tipping arrangements, placing employee consultation and transparency at the heart of how tips are distributed.
While the legislation does not fundamentally alter the existing framework which came into force in October 2024 which required employers to pass tips on to workers fairly and in full, it does introduce new obligations that hospitality employers will need to take seriously.
Under the new provision, that has now been pushed back through to the end of 2026, employers must consult workers before introducing a tipping policy. Consultation must take place with recognised trade union representatives where they exist, elected worker representatives, or directly with affected employees if no representatives are in place. This represents a clear shift in focus from employer-led decision-making towards greater worker participation.
Another significant change is the requirement to review tipping policies regularly. Employers will be required to revisit their policy at least once every three years and, crucially, undertake a fresh consultation exercise as part of that review. This means tipping arrangements will no longer be documents that can be written once and left untouched. Businesses will need to demonstrate that policies remain fair, relevant and informed by employee feedback.
Importantly, these new duties carry legal consequences. Workers who believe an employer has failed to comply with the consultation requirements may bring a claim before an Employment Tribunal. Tribunals will have the power to award compensation of up to £5,000 where a worker has suffered a financial loss attributable to the employer’s failure.
Note also that the draft code of practice, published by the Government post completion of consultation, has been withdrawn and it is not clear whether a revised draft code will be issued or if it is, how it will otherwise support the proposed new consultation requirements.
Whilst you may be breathing a sigh of relief, there’s no time to rest on your laurels. Along with other changes to the Employment Rights Act 2025 the duty to take ALL reasonable steps to prevent sexual harassment and employment liability for harassment of staff by third parties will be implemented from 30 October 2026. And if you’ve not thought of practical ideas to address this contact Higgs Navigator to understand what some of these may be.
If you have any questions on any of the issues raised in the above article, please contact Ruth Gladwell.