New law separates tips from pay
New laws come into force today making it illegal for bars, restaurants and hotels to use tips to make up minimum pay.
The Government said the change would promote "fairness" for staff, despite claims it will cost the hospitality industry an estimated £100m and thousands of jobs.
Bob Cotton, chief executive of the British Hospitality Association, said individuals working in the industry would also be worse off through having to pay national insurance on more of their wages.
Estimating 5,000 jobs could go as a result, he told the BBC: "It is going to cost businesses in excess of £100 million.
"In the short term it will put jobs at risk."
But Business Secretary Lord Mandelson said customers would be "amazed" to discover that any tips they left could be used to top up wages.
He added: "When I leave a tip, I don't expect it to be used to make up the minimum wage.
"I want it to go to the person who has served me as a thank-you for their service - this is a basic issue of fairness.
"Tips are meant as a bonus, not a tool to boost pay to the basic minimum."
A code of practice will be published aimed at providing "clarity" for customers and staff as well as businesses from tomorrow.
The change comes into effect on the day that the national minimum wage rises by 7p an hour to £5.80. For 18 to 21-year-olds, the rate increases by 6p to £4.83 per hour.
Derek Simpson, joint leader of Unite, which has been campaigning to close the tips loophole, said: "There is an urgent need for the hospitality industry to be transparent in how they handle the tips and service charge money left for staff.
"The new code will help consumers see where the money left for good service is going.
"We want to see all employers sign up to the code and ensure that their staff and customers can be confident that staff are treated fairly."
The new law on tips will be enforced by Revenue and Customs officers.
- 1 10 ways we damage our teeth – without realising
- 5 Photo of wedding guest proposing to girlfriend in front of bride and groom goes viral
Hopes raised for treatment of severe amnesia after scientists retrieve lost memory – using light
Playboy model April Summers speaks out about being a victim of a voyeuristic sex crime
Poorest part of London is wealthier than the richest parts of Northern Ireland and Wales
British tourists complain that impoverished boat migrants are making holidays 'awkward' in Kos
How to live to be really old
EU referendum: David Cameron's rules are a 'democratic disgrace', says French-born Scottish politician set to be denied a vote
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Australian man punched in the face for defending Muslim women from abuse on train
A nation of inequality: How the UK is failing to feed its most vulnerable people
David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
EU referendum: David Cameron to deny EU migrants and under-18s the chance to vote
£16000 - £18000 per annum: Recruitment Genius: One of the UK's leading Solar P...
£18000 per annum: Recruitment Genius: This organisation is changing the way at...
Negotiable: Recruitment Genius: A Digital Web Designer is required to join a f...
Negotiable: Recruitment Genius: This is a fantastic opportunity to develop an ...