Tips left for restaurant staff do not always reach them
Employers are to be banned from using tips and service charges to "top up" staff pay to meet the minimum wage from October, the government says.
The change will benefit those working in industries such as restaurants, where tipping is commonplace.
Employment Relations Minister Pat McFadden said that the practice of allowing firms to use service charges to pay staff was unfair.
Unions, which have long campaigned for change, welcomed the move.
"When people leave a tip for staff, in a restaurant or anywhere else, they have a right to know that it will not be used to make up the minimum wage. It is also important for employers to have a level playing field on wages," Mr McFadden said.
Derek Simpson, the Unite trade union's general secretary, said that the government was doing the right thing for low-waged waiting staff.
"Hard-working staff will be delighted to learn that bad employers can no longer line their pockets with the money that customers intended to go to workers," he said.
The Department for Business Enterprise and Regulatory Reform said businesses supported the change.