If you've heard "employers can no longer keep any of the tips" and assumed that's a 2026 change, it isn't — and getting the timeline right matters, because there are genuinely two different things happening here, on two different clocks.
The part that's already settled: 100% to workers, since October 2024
Under the Employment (Allocation of Tips) Act 2023, which came into force in October 2024, employers have been legally required to pass on the full amount of tips, gratuities and service charges to workers, with no deductions beyond tax. That's not new for 2026. If your business has been running any kind of discretionary retention on service charge, that's already been non-compliant for close to two years — not a future risk, a present one.
The quick test: if any part of your service charge or tips is currently retained by the business rather than distributed to staff, that's already outside the law as it's stood since October 2024 — regardless of anything happening in 2026.
What ERA 2025 actually adds, expected October 2026
What's changing isn't how much workers receive — it's the process behind deciding how it's split. The Employment Rights Act 2025 introduces a new layer of obligation on top of the existing 100%-distribution rule:
- A duty to consult with a trade union or elected worker representatives — or workers directly if there's no representative body — before creating the first written tipping policy
- A requirement to repeat that consultation every time the policy is reviewed, with a review required at least every three years from when the policy was first implemented
- A duty to make an anonymised summary of the consultation feedback available to all workers
- Tribunal time limits for tipping-related claims are expected to double, from three months to six
These changes are expected to come into force in October 2026, alongside an updated statutory Code of Practice on Fair and Transparent Distribution of Tips — though the exact commencement date hasn't been confirmed yet.
What a Tronc council actually is, and whether you need one
A Tronc council is a group of staff representatives from across different roles or departments who help shape decisions on tipping policy. It's not a legal requirement by that specific name, but it's the most practical way most hospitality businesses will satisfy the new consultation duty without turning every policy review into an ad-hoc scramble to gather worker views. It sits alongside — not instead of — a written tip policy and an independent troncmaster, who designs the allocation framework and makes the final call on individual distributions.
The tightrope: consulting staff without compromising the troncmaster's independence
This is the part worth planning for now rather than in October. The National Insurance exemption on tronc payments depends on the troncmaster retaining genuine independent discretion over individual allocations — an employer can't be seen to be directing who gets what. But the new law requires consultation with staff on the policy itself. Getting this wrong in either direction has a cost: too little consultation risks non-compliance with the new duty; consultation that strays into dictating individual allocation decisions risks the NI exemption on the whole tronc arrangement.
The safer path most employment specialists are pointing to: keep consultation scoped to which tips qualify for distribution, the broad principles of fair allocation, and the categories of workers who should benefit — not specific amounts for specific people. Allocation decisions stay with the troncmaster, communicated in writing, with the troncmaster's independent discretion clearly preserved.
Practical checklist: what to have ready before October, regardless of whether the date slips
- Confirm your current tipping policy actually reflects 100% distribution to workers, with no retention — this should already be true, but worth verifying now rather than assuming
- Identify who your independent troncmaster is, or will be, and document that their allocation decisions are genuinely independent
- Start thinking about who would sit on a Tronc council if you stood one up — representation across roles and departments, not just management-selected voices
- Keep a dated record of your current policy and when it was last reviewed, so the three-year review clock has a clear starting point once the duty commences
- Watch for the finalised Code of Practice — the draft is published, but the final version will settle some of the detail still open for interpretation
None of this needs to happen this week. But the businesses that start documenting their tronc arrangements properly now won't be reconstructing months of history under time pressure once the consultation duty actually commences.