The code, produced in conjunction with the Department for Business and issued this week, urges restaurants and hotels to disclose to customers exactly how they will split discretionary service charges and non-cash tips.
BHA members have agreed to implement the code ahead of the government's new legislation which will ban the use of tips to make up the National Minimal Wage from October.
Bob Cotton, chief executive of the BHA, urged other restaurants and hotels to follow the code in order for disclosure to become universal practice.
"We've had too little information in the past about the way the service charge is collected, what it is for and who receives it," he said. "This has given rise to widespread criticism which has damaged the industry's reputation.
"The Code will ensure that restaurants make crystal clear how they distribute the proceeds of the charge, who gets it and what percentage, if any, is kept by the restaurant to cover legitimate costs."
Customers should be able to see whether money will be deducted for handling costs and how the remainder is shared between the restaurant and its employees.
The BHA has previously warned that the controversial legislation could cost the industry £450m and 45,000 jobs, especially if launched at the height of the recession.
By Emily Manson
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