The government plans to make it illegal for restaurant, bar and cafe owners to withhold tips from staff, potentially helping around two million workers.
The ministers said research shows many companies add discretionary service charges to customer invoices and then keep some of the payments themselves.
The problem was first highlighted several years ago when it was revealed that chains, including Cote and Bills, were adding a service fee and then supplementing managers’ salaries with revenue.
This left the front desk workers to “withdraw limited amounts of tips at home.”
Typically, executives were paid minimum wage, with the understanding that their wages would be increased between Â£ 35,000 and Â£ 40,000 per year through trunk systems.
The government said its plans will allow workers to see changeover schedules to ensure the practice does not occur.
He added that the move will leave hospitality workers better paid, saying too many of them rely on tips to supplement their incomes.
Labor Market Minister Paul Scully said: âUnfortunately, some companies choose to withhold money from hard-working employees who have received tips from customers as a reward for good service.
“Our plans will make this illegal and ensure that tips go to those who worked for it.” This will give a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers that their money is going to those who deserve it. “
Previously, some chains also charged workers a small processing fee for tips left by credit and debit cards, although this has largely ceased.
The new rules would make it illegal to add these fees, the government said, because 80% of tips are now paid this way.
The new laws would include a statutory code of practice with employees able to request tip records. Staff could also sue employers in court if they felt tips had been withheld.