The UK’s leading trade union, Unite, has issued a forceful demand for the immediate withdrawal of a draft code of practice designed to govern the fair and transparent distribution of tips, labelling it as "flawed" and calling for a period of "proper consultation." The union contends that the government has significantly reneged on its original promise to grant workers full autonomy over the allocation of their tips, instead proposing a system where, from October 2026, employers will merely be obliged to consult on how these gratuities are distributed. This approach, Unite warns, effectively grants employers "carte blanche" to decide which staff members ultimately receive tips, potentially undermining the very purpose of the forthcoming legislation.
The controversy surrounds the revised draft Code of Practice, published by the government last week alongside its response to a consultation on tipping legislation. This code is intended to reflect the additional obligations introduced by the Employment Rights Act 2025, a landmark piece of legislation aimed at ensuring that all tips, gratuities, and service charges are passed on to workers in full. However, Unite argues that while the Act itself received prior consultation, the crucial details within the Code of Practice, which dictates the practical implementation, have not been subject to adequate worker input. This perceived oversight has ignited a fresh wave of criticism from labour representatives, who view it as a significant step back from the original intent of the law.
The Legislative Journey: A Promise Unfulfilled?
The journey towards dedicated tipping legislation in the UK has been protracted, marked by years of campaigning from unions and worker advocacy groups. Historically, the distribution of tips has been a contentious issue within the hospitality sector. Prior to the recent legislative efforts, there was no explicit legal obligation for employers to pass on tips to staff. This allowed for various practices, some of which were widely criticised, such as employers retaining a significant portion of tips, using them to cover administrative costs, or even supplementing wages, rather than them being a genuine bonus from customers to staff for good service.
The initial impetus for reform gained significant traction around 2016, when the government first signalled its intention to ban employers from withholding tips. This commitment was reinforced through several consultations, with a clear promise emerging: legislation would be introduced to ensure tips went directly to the workers who earned them. The subsequent "Tipping Bill," which eventually became the Employment Rights Act 2025, was widely welcomed as a measure to protect vulnerable workers and enhance transparency. The Act’s core principle is that employers must pass on 100% of tips to staff, establish a written policy on tip distribution, and ensure transparency in how tips are handled. The expectation was that the accompanying Code of Practice would provide the robust framework to ensure this principle was realised without loopholes.
Unite’s Core Grievance: Consultation Versus Control
Unite’s primary objection stems from the perceived dilution of worker control over tips. The draft code states that consultation should be "genuine, proportionate, inclusive and transparent." While employers are not required to adopt every suggestion, they should seek broad agreement that tipping arrangements are fair, reasonable, and clearly understood. It also confirms that workers’ support for a particular distribution method may assist an employment tribunal in deciding whether a tipping arrangement is fair and reasonable.
However, Unite interprets this framework as fundamentally inadequate. Sharon Graham, Unite general secretary, articulated the union’s position unequivocally: "Workers should have control over their own tips, pure and simple. Most customers assume they do anyway. Giving managers control, even letting them keep a slice for themselves, is clearly unfair." Graham further highlighted the union’s deep concern, stating, "The government messed this up the first time in their code of practice on tipping. The fact that they are now repeating the same mistakes in a revised version that was supposed to address workers’ concerns is genuinely concerning."
The union argues that "merely having to consult" is a far cry from "full control." In practice, Unite believes this allows employers to dictate terms, even if workers collectively disagree, as long as a superficial consultation process has taken place. This discretion, they argue, opens the door to potential abuses, such as management deciding to allocate a smaller proportion of tips to front-of-house staff, or even using tips to offset the underpayment of other workers, such as kitchen staff, who might traditionally receive less in direct gratuities. This fear is particularly acute for the lowest-paid workers, many of whom are on precarious contracts and rely heavily on tips to supplement their income, often making a significant difference to their take-home pay.
Broader Implications for Hospitality Workers
The hospitality sector is one of the UK’s largest employers, with estimates suggesting it employs over 3.2 million people, making it a crucial part of the national economy. A significant portion of these workers, particularly in roles such as waiting staff, bartenders, and hotel staff, rely on tips as a vital component of their earnings. Research by various bodies, including the Living Wage Foundation, has often highlighted the prevalence of low pay within the sector, with tips often bridging the gap between minimum wage and a living wage. For many, tips are not merely a bonus but a fundamental part of their financial stability, especially in the current climate of high inflation and a persistent cost-of-living crisis.
Unite believes that the failure to enshrine robust worker control over tips will disproportionately disadvantage these vulnerable segments of the workforce. If employers retain the ultimate say, tips could effectively become another management tool rather than a direct reward for service. This could lead to a demoralised workforce, increased turnover in a sector already struggling with recruitment and retention, and ultimately, a poorer experience for customers who expect their generosity to directly benefit the service staff.
A Call for Genuine Engagement and Transparency
Bryan Simpson, Unite lead organiser for hospitality, reinforced the union’s demand for the code’s withdrawal. "This new flawed code of practice must be withdrawn," Simpson stated. "The government is showing contempt for hospitality workers who are among the most vulnerable in the economy, by not even consulting on its plans." This criticism points to a perceived lack of genuine engagement with the very people the legislation is designed to protect. The absence of consultation on the specifics of the code, in contrast to the broader Employment Rights Act 2025, is seen as a significant oversight that undermines the spirit of the law.
The union also brought a political dimension to its demands, highlighting previous commitments from the opposition: "Labour promised to give workers greater control over their tips. That promise must now be honoured." This puts pressure on both the incumbent government to reconsider its approach and the opposition to clarify how they would implement such legislation if they were in power.
The Government’s Position and Future Outlook
While the Department for Business and Trade (DBT) has not yet issued a public response to Unite’s latest demands, its position, as inferred from the draft code and previous statements, is that the legislation provides a robust framework for fair tipping. The government’s intent, as outlined during the passage of the Employment Rights Act 2025, was to ensure fairness and transparency. The proposed code aims to offer guidance to employers on how to implement the new legal requirements, including methods for distribution, record-keeping, and dispute resolution. The inclusion of clauses suggesting that workers’ support for a distribution method could assist an employment tribunal indicates an acknowledgement of worker voice, albeit within a framework where employer consultation remains central.
However, the chasm between the government’s interpretation of "fair and transparent" and Unite’s demand for "worker control" remains significant. The dispute underscores a fundamental tension in labour relations: where the line is drawn between employer discretion and worker autonomy, particularly concerning earned income that is not part of a contractual wage.
The current situation sets the stage for continued debate and potential industrial action or legal challenges if the draft code is not revised to address union concerns. As the October 2026 implementation date approaches, the Department for Business and Trade will face increasing pressure to engage in further dialogue with trade unions and worker representatives to ensure that the final Code of Practice genuinely delivers on the promise of fair and transparent tipping, truly empowering hospitality workers rather than leaving them at the mercy of employer discretion. The outcome of this standoff will have far-reaching implications for millions of hospitality workers across the UK, shaping their economic well-being and their sense of fairness in the workplace. Personnel Today has reached out to the Department for Business and Trade for official comment regarding Unite’s demands.
