Currently, many hospitality businesses which add a discretionary service charge onto customer’s bills keep part, or all, of this money instead of passing it onto staff. But under the new plans, all customer tips will go to staff.

Most hospitality workers, many of whom are earning the National Minimum Wage or National Living Wage, rely on tipping to top up their income.

Under the proposed legislation, the government will make it illegal for employers to withhold tips from workers. The move is set to help about 2 million people working in about 190,000 businesses across the hospitality, leisure and services sectors.

Paul Scully, labour markets minister, 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.”

Moves towards a cashless society have accelerated dodgy tipping practices, as an increase in card payments has made it easier for businesses to keep the funds.

About 80% of all UK tipping now happens by card, rather than cash going straight into the pockets of staff. Businesses who receive tips by card currently have the choice of whether to keep it or pass it on to workers.

The legislation will include a requirement for all employers to pass on tips to workers without any deductions. It will also include a statutory code of practice setting out how tips should be distributed to ensure fairness and transparency.

Workers will also have the right to make a request for information relating to an employer’s tipping record, enabling them to bring forward a credible claim to an employment tribunal. Under the changes, if an employer breaks the rules it can be taken to an employment tribunal, where employers can be forced to compensate workers, often in addition to fines.

Union Unite welcomed the changes but criticised the government for delaying bringing in the legislation for five years. Back in May 2016 the then business secretary Sajid Javid said he planned to end unfair tipping practices.

Unite said based on a survey of its Pizza Express members, waiting staff were losing £2,000-a-year in ‘lost’ tips or an estimated £10,000 since the government’s 2016 announcement to clamp down on unfair tipping practices.

Sharon Graham, Unite general secretary, said: “It’s shocking that this group of mainly young workers has had to wait five years for government action to tackle the tips scandal. We will continue to challenge abuses in the workplace and Unite will keep fighting to improve the jobs, pay and conditions of the hospitality workforce.”