It follows a string of strikes staged by workers at TGI Fridays outlets earlier this year over a new pay policy that redistributes customer tips from waiters to kitchen staff
Details of the legislation are yet to be confirmed, but owners will have to ensure the entire service charge is passed on the waiters and back of house staff.
May will say the tough new legislation is part of a push to encourage fairer working practices.
But trade body UKHospitality says the plans place an “unnecessary burden” on businesses and it has already developed a tipping Code of Practice approved by Unite.
“Some smaller businesses may retain a small proportion of tips to cover the costs of credit card charges and processing payments – but this is a small amount and the practice has been approved by Unite,” says Kate Nicholls, UKHospitality chief executive.
“At a time when costs are mounting for operators in the sector, the Government must be careful about introducing additional legislation.”
The belated announcement comes two years after a Government consultation first recommended the move.
It follows growing public scrutiny over a perceived lack of transparency in restaurants tipping policies.
In 2015 chains including Pizza Express and Las Iguanas came under fire for leveraging an administration charge on card tips to cover the costs of running a tronc system.
But companies such as Pizza Express and Casual Dining Group later removed the charges following a major backlash.
And in May staff at two branches of TGI Fridays walked out following a row over changes to the groups policy which they claimed would take tips from waiting staff to top up the wages of back of house workers, instead of giving them a pay rise. TGIs said the changes were in “the interest of fairness” based on “research in to industry norms”.
A spokesperson for Casual Dining Group – which operates brands including Café Rouge, Bella Italia and Las Iguanas – said the company was disappointed by the Governments “inaccurate and ill-informed” comments.
“Our staff keep 100% of cash tips, and 97.5% of credit card tips, after a 2.5% administration charge to cover credit card and banking administration charges. Our staff are at the heart of our business, and are well paid. Our policy on tips is in line with government sponsored guidance issued in 2009 and which was approved by Unite and HMRC.