It will be illegal for owners of restaurants, bars and cafes to withhold tips from their staff under new government plans.
New laws will provide a financial boost to around 2 million hospitality workers across the country, according to the government.
Labour markets minister Paul Scully said the plans will make it illegal for companies to "choose to withhold cash from hardworking staff" and ensure "tips will go to those who worked for it".
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The government said many hospitality workers, who are on the National Living Wage or Minimum Wage, rely on tips to top up their income.
But, research shows that many businesses that add a discretionary service charge onto customer’s bills are keeping part or all of these service charges, instead of passing them onto staff.
Moves towards a cashless society have accelerated dodgy tipping practices, according to the government, as an increase in card payments has made it easier for businesses to keep the funds that customers expect to go to staff.
The government said 80 per cent of all tipping in the UK is now done via card payments, and businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers.
The new legislation will require all employers to pass on tips to workers without any deductions.
Night Time Economy Adviser for Greater Manchester Sacha Lord welcomed the new plans, adding that it is "imperative that those who have earned their money, receive it".
"The unfair practice of withholding staff tips is something we have been campaigning on for many years, and I am pleased to see the news this week that new laws will now be introduced to prevent this from happening," he said.
"In the meantime, we will continue to pressure those operators who keep staff tips, and encourage workers who face this predicament to voice their disappointment."
He added: "This legislation does not mean that the conversations regarding wages in the hospitality industry are resolved."
"In a sector where the majority are paid minimum wage, employees often rely on tips to top up incomes and it is imperative that those who have earned their money, receive it. Often, tips can often make the difference between the employee walking home after their shift ends at midnight, or affording a taxi."
As part of the new legislation, the government also plans to introduce a Statutory Code of Practice setting out how tips should be distributed to ensure fairness and transparency along with new rights for workers allowing them to make a request for information relating to an employer’s tipping record.
Under the changes, if an employer breaks the rules they can be taken to an Employment Tribunal, where employers can be forced to compensate workers, often in addition to fines.
Mr Lord urged the government to introduce the changes "sooner rather than later" in light of the financial struggles many hospitality workers have undergone in the last 18 months due to the coronavirus pandemic.
He added that many are earning less than the living wage despite the industry supporting a large proportion of the regions' workers.
"This is an industry where workers are disproportionately low-paid compared to the wider economy," he said.
"In Greater Manchester alone, the sector supported a third of the city-region's workforce pre-pandemic, yet 53 per cent of part-time and 21 per cent of full-time hospitality workers earn less than the living wage."
"By continuing to pay staff on the cheap, not only is it unfair on the workers themselves, but the industry simply won’t attract new entrants when they can earn higher salaries elsewhere. We need to ensure staff are paid appropriately in order to sustain its attractiveness."
