Employers who withhold tips from workers will be breaking the law under government plans to help around two million workers in the hospitality, leisure, and services sectors.
It comes after research showing that many owners of restaurants, bars, and cafes add discretionary service charges to customers’ bills but then keep some of the money themselves.
The problem was highlighted in 2015 when it was revealed that some chains were adding service charges and using some of this money to top up managers’ salaries.
Managers had typically been paid only minimum wage on this understanding.
Some chains had also charged workers a processing fee for tips left by credit and debit cards – the means of payment for around 80% of tips.
The new laws will force bosses to pass on tips to workers without any deductions.
Employees will be able to request tipping records and take employers to a tribunal if they feel tips have been withheld.
Labour markets minister Paul Scully said: “Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.
“Our plans will make this illegal and ensure tips will go to those who worked for it.
“This will provide a boost to workers in pubs, cafes and restaurants across the country, while reassuring customers their money is going to those who deserve it.”
Most hospitality workers earn the national minimum wage or living wage and rely on tips to top up their income.
Under laws brought in more than a decade ago, tips do not count towards those minimum rates of pay.
The government did not say when the new laws would come in but said they would “form part of a package of measures which will provide further protections around workers’ rights”.
They added: “Further detail will be set out in due course.”