Pizza Express has become the latest restaurant chain to reverse its policy of taking a cut from tips to waiting staff after a union campaign and a backlash from customers.

Waiters called for public support after revealing the 430-branch chain was keeping 8p out of every £1 of tips paid by card, earning the company an estimated £1m a year from what it called an admin fee, according to Unite, the union representing the waiting staff.

It later emerged that Pizza Express was not the only chain to take money from staff tips, but now, after protests, media exposes and the opening of a government inquiry into the practice, the chain has announced it will ditch the policy.

From 6 October tips made on card at any Pizza Express branch will be fully distributed among restaurant staff according to a formula agreed by the chain’s tronc committee, with 30% going to cleaners and kitchen staff and 70% to the individual waiter.

The chain did not admit to bowing to pressure, saying the change was made possible by a new automated system to distribute tips. This system, developed over the past six months, replaced a labour-intensive manual procedure, a company blogpost said.

Nevertheless, trade unions hailed it as a victory. Unite released a statement saying champagne corks were popping over the decision and praising staff for taking a brave stand against bosses.

“We will turn tonight’s demo at the Baker Street Pizza Express into a short victory celebration – a truly champagne moment – and call on other chains to follow the lead of Giraffe and Pizza Express,” Dave Turnbull, Unite regional officer, said.

But the union said work would continue, with a number of other restaurants – including Ask Italian, Prezzo, Belgo, Strada, Café Rouge, Bella Italia and Zizzi – accused of not paying fair tips to staff. Giraffe last month announced it was reversing its policy of skimming a 10% admin fee off tips.

Those restaurants continuing the practice face mounting pressure. Sajid Javid, the business secretary, launched an investigation into the abuse of tipping last month, days after intervening in the row by saying chains should pay their tips.

The inquiry, which will run until 10 November, will examine whether or not government intervention is necessary. It could lead to a limit being put on the amount that can be withheld, or the naming and shaming of chains who do not pass on tips.

Unite welcomed the investigation, but rejected the suggestion that the problem could be solved by putting a cap on the amount taken. That, it said, would simply legitimise the practice and would be difficult to enforce.

Announcing the Pizza Express decision, Richard Hodgson, the company’s chief executive, said he agreed with calls for more transparency across the food and drink industry so that customers could make an informed choice about tipping.

“We recognise that our team members are critical to delivering the fantastic customer experience that Pizza Express has built over many years,” Hodgson said.

“As a leader in the casual-dining industry, we’re committed to best practice and to ensuring that our people are properly rewarded for the valuable contribution they make to our business.”

But Turnbull said the fight was not over. He called for a radical revision of the tronc system that dictates how tips are distributed. He said: “To ensure the process of allocating tips is wholly independent from employers we want to see new guidance on tronc schemes that ensure only waiting staff themselves are eligible to hold positions, such as tronc ‘master’ and on the tronc committee.

“Also such officers should be nominated and elected by staff and are obligated to consult widely with all staff before contemplating any future changes to the distribution and share of tips.”