All tips will go to staff under new plans to overhaul tipping practices set out by the government, providing a financial boost to hospitality workers across the country.

Legislation on tipping will be supported by a statutory Code of Practice, developed in partnership with workers and employers to set out the principles of fairness and transparency.

Most hospitality workers – many of whom are earning the national minimum wage or national living wage – rely on tipping 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.

The government will make it illegal for employers to withhold tips from workers. The move is set to help around 2m staff working in one of the 190,000 businesses across the hospitality, leisure and services sectors, where tipping is common place and can make up a large part of their income.