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Tipping point - government weighs in on service charge scandal

Luke Whitmore - Law on the Web

  1. 26 August 2015
  2. Employment
  3. 0 comments
Tipping at a restaurant

The government may investigate how tips are distributed in the restaurant sector after allegations arose that one chain keeps the service charge for itself.

French food chain Côte was at the centre of a furore last week after workers claimed that a 12.5% service charge imposed by the restaurant does not go into employees’ pockets, but is instead added to the company’s profits – even though staff are told to inform customers that the optional charge is shared out amongst them.

Côte attempted to justify the practice by saying that the funds are used to pay employees more; its staff receive an hourly wage ranging from £7.50 to £8, higher than the minimum wage of £6.50.

But it later denied the claims entirely, saying that income from the service charge is returned to individual restaurants to be distributed among staff, and that “any deviation from this policy will be investigated and disciplinary action taken where appropriate”.

However, its statements have done little to appease its critics, with MPs now suggesting that a parliamentary inquiry could be on the cards.

Business secretary Sajid Javid has said: “While it would not be appropriate to comment on this individual case, as far as I’m concerned, tips belong to the staff.

“I’m getting increasingly concerned about the practice of some restaurants, and will be taking a serious look into the issues raised.”

And the chairman of the Business Select Committee, Iain Wright MP, said that he was “particularly outraged that the firm would tell staff to essentially lie to customers”.

“If I say to someone serving me in a restaurant, ‘do you get the service charge?’ I expect it to go 100 per cent to them as a tip for great service.  For Côte to say it’s going to the bottom line rather than in people’s pockets is unacceptable.”

It isn’t just Côte’s behaviour that has spurred the government into action, with other chains having faced recent criticism over the way they handle tips. While none appear to have quite as controversial a policy as Côte’s, August has seen protests over Pizza Express’s practice of subtracting an “administration fee” from employee tips – an approach shared by a number of other restaurants, like Café Rouge and Bella Italia.

Other food chains, such as Las Iguanas and Turtle Bay, have also come under fire for requiring waiting staff to pay the company a percentage of the table sales made on each of their shifts, under the assumption that tips will cover the cost. Staff have complained that this means that they are sometimes paying these fees out of their own pockets when they receive fewer tips than expected.

It seems likely that all of these practices will also come under scrutiny if the government does decide to take action, with questions no doubt being raised of what exactly tips should be used for and how this can be enforced.

There have been attempts to regulate these issues before. The last Labour government did put into place a voluntary code of practice covering all industries in which tipping is commonplace, back in 2009, but this appears to have been roundly ignored since then.

No doubt underpaid waiting staff everywhere are anxiously awaiting a government inquiry to clarify how exactly tips, service charges and other such gratuities should be handled, but it remains to be seen exactly what will be done to ensure that everyone gets their fair share.

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