Employment Rights Act 2025 – October 2026 – Part 2
The Employment Rights Act 2025 brings major updates to UK workplace law, and several important changes take effect within legal changes in October 2026. In this second part of our series, I explain the new rules around tips, public sector outsourcing, and trade union access—and what employers should do now to prepare.
You can read Part 1 here
New tipping rules
October 2026 also introduces stricter rules for workplaces that handle tips, gratuities or service charges.
Key changes
- Employers must consult employees or their trade union before creating a tipping policy.
- Every tipping policy must be formally reviewed at least every three years.
- Workers must receive clear information on how tips are shared and must have a fair way to challenge decisions.
What should employers do?
- Audit current practices
- Map out how you currently collect, distribute and communicate tips and identify any gaps in fairness or transparency.
- Prepare for consultation and documentation
- Plan employee or union consultation on your tipping policy.
- Create clear written policies explaining how tips are allocated and how workers can raise concerns.
Public sector outsourcing: the new two‑tier code
The Government will introduce a new “two‑tier code” in October 2026 to reduce unfair differences in pay and conditions when public sector work transfers to private contractors.
Key changes
- The new code will prevent contractors from giving transferring staff less favourable terms compared with colleagues doing similar work.
- The Government will gain new powers to introduce a statutory code of practice to promote fair treatment in outsourced public sector roles.
What should employers do?
- Review outsourcing arrangements
- Identify any contracts involving staff transfers from the public sector.
- Compare terms and conditions for transferring staff with those of existing employees doing similar roles.
- Build equality into future procurement and planning
- Ensure tenders, procurement decisions and workforce planning allow for alignment of terms where needed under the new code.
Updated Trade Union Rules
October 2026 also strengthens trade union rights.
Key Changes
- Employers must give workers clearer information about trade union membership.
- Trade union representatives will receive greater access and accommodation to support members at work.
You can read more about these updates in our earlier blog here
What should employers do?
- Review workplace access arrangements for union representatives.
- Update onboarding materials and internal communications to include clear information about trade union rights.
- Train managers to support constructive engagement with unions.
Final Thoughts
The October 2026 legal changes introduce new responsibilities and higher compliance expectations across tipping practices, outsourcing, and union engagement. Taking early action will help you stay compliant, strengthen employee trust and avoid unnecessary risk.
If you need support reviewing your policies or planning for these changes, get in touch.