Nick Simmonite said he was unaware of any companies hanging on to money meant for staff.
He spoke out as labour markets minister Paul Scully announced plans for legislation that could see employers taken to an employment tribunal and ultimately fined for the practice.
Mr Simmonite is landlord of the Frog and Parrot on Division Street and chair of night time association Unight.
He said: “All the premises I know run a system that distributes tips to staff based on hours worked. Sheffield hasn’t got a massive tipping culture but if you get used to it, it becomes part and parcel of your wages.”
Wages were going up due to rapid expansion in the sector, he added.
Hospitality had also seen a big shift to paying by card, which deterred some customers from tipping. But it made life easier for the business because it was easy to identify. Like charitable donations, they sat separately on the bill.
In 2015, some national chain restaurants were accused of keeping tips or charging 10 per cent ‘administrative costs’ on processing service charge payments if they were made by debit or credit card.
Although they denied any wrongdoing, the reports drew a huge backlash from unions and the public.
Mr Simmonite said he thought since then they had ‘put their house in order’.
In a statement, the Department for Business said the new legislation would help about two million people working in the hospitality industry.
It is expected to come into force within the next year.
Currently, businesses who receive tips by card have the choice of whether to keep it or pass it on to workers. Cash tips are legally the property of staff.
Conservative MP Paul Scully said on Tuesday: "Unfortunately, some companies choose to withhold cash from hardworking staff who have been tipped by customers as a reward for good service.
"Our plans will make this illegal and ensure tips will go to those who worked for it.”