Victory in fight to allow staff to keep diners' tips

Restaurants will soon be required to tell diners whether their tips go straight to staff, in a victory for The Independent's "fair tips, fair pay" campaign.

The move follows diners' concerns that their gratuities do not go to the staff who serve them, with restaurants often "creaming off" some or using tips to top up low pay rates.

The Independent pressed for restaurants to adopt a transparent policy for distributing service charges and to clearly publicise their policy on tips. Now ministers have decided to adopt the proposal, which received backing from the hospitality industry last night.

A government consultation paper this month will set out how clear tipping policies can be brought in by restaurants. The issue has already been raised by ministers in talks with unions and the hospitality industry.

The Government has decided it would be impractical to legislate to enforce the practice, but believe a code of conduct agreed by ministers, unions and restaurant representatives would be more effective.

A Whitehall source said: "The political will is there to do this – it is just a case of how we do it best. We want to get it right and that means not rushing it."

He also pointed out that the measure would benefit staff, who are often ignorant of their employer's tips policy.

Bob Cotton, the chief executive of the British Hospitality Association, said: "I'm sure better information will be displayed both to consumers and to staff. We may have to look at something on the menu, something on the wall or something on a website, or a combination of these things, so that the information gets over."

Ministers had already agreed to make it illegal for restaurants to deny staff the minimum wage on the grounds that gratuities take them over the £5.52-an-hour rate.

The issue will be debated in the Commons today, when the Conservatives will table an amendment to the Employment Bill calling for legislation explicitly outlawing such sharp practice over the minimum wage. But the Government believes the ban can be more speedily introduced through regulations under the National Minimum Wage Act. Pat McFadden, the Employment Relations minister, said: "Since a change in primary legislation is not actually necessary and we are already committed to changing the relevant regulations, the Tory amendment is meaningless."

The Independent's campaign, which began on 15 July, won the support of MPs from all parties.

It was launched after an investigation discovered that tips left by diners were regularly used to pay basic wages, or to meet restaurant costs. Several well-known high street names including Carluccio's, Café Rouge, Chez Gérard, Strada and Caffè Uno paid staff less than the minimum wage and used gratuities to make up the shortfall.

In 2006 Britons spent an estimated £37.6bn on food and drink in restaurants. Tips at 12 per cent should have earned staff some £4.7bn, but many employers use loopholes in the law to claw some of the money back.