The British Hospitality Association has called for new laws on tipping that would require restaurant and hotel operators to tell guests how service charges and tips are distributed.
It has written to business secretary Sajid Javid to propose that business be required to reveal exactly what is deducted from service charges and why, in order to end confusion among customers.
BHA chief executive Ufi Ibrahim said: "For us it's all about transparency.
"Although restaurants are legally entitled to deduct administration costs from service charges, for example, we think it's important the customers understands exactly how much is deducted and why.
"Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff."
Ibrahim said that while restaurants were entitled to deduct administration fees, it was important customers understood how much was deduced and why.
She added: "Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff."
The BHA's suggestion comes as the government is looking to investigate the wider tipping and service charge practices in the UK, and introduce a code of practice across restaurants as a whole.
The letter to Sajid Javid said: "We propose that the following disclosures be made compulsory: Restaurants should disclose to customers how they deal with discretionary service charge and non-cash tips, at least by a written notice available for inspection at each restaurant and on the restaurant's website, if there is one.
"The disclosure should cover:
1. Whether an amount is deducted for handling costs (and how much)
2. How the remainder is shared between the restaurant and the employees
3. The broad process for distribution, for example, that they are shared between the employees in the restaurant through a system controlled by a representative of the employees."
The deadline for responses to the department for business, innovation and skills' investigation into tipping is 10 November.
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