Last month saw the government announce new legislation to govern the way restaurant tips are distributed amongst staff. Here, we take a closer look.
Teresa May says that the tough legislation is part of the government’s push to end exploitive employment practices, adding greater transparency and fairness within the industry.
The move follows a public outcry in 2015 when it became evident that many High Street chains were taking up to 10% of tips paid by card. Currently, cash tips are legally the property of staff, whilst tips paid by card are not. They belong to the owner of the restaurant who has no legal duty to give any of it to staff. How businesses decide to share these tips varies widely.
Aside from the latest legislation by the government, the last couple of years has generally seen a greater push within the industry to address such issues. Initiatives such as UKHospitality’s ‘Code of Practice’, developed with Unite, has accelerated the shift. The code provides businesses with best practice advice on tipping structures based on transparency, fairness and accountability.
With little detail or explanation as to what exactly the new legislation may include, the fear within the industry is that it may actually make the situation worse if it is not drafted properly. Businesses could end up with a lot of extra costs and administration fees for not a huge amount of benefit.
Ultimately businesses should be more transparent with both staff and customers about how they operate. Peter Davies, managing director of WMT Troncmaster Services is currently working on a Kitemark scheme whereby businesses can display their Kitemark to customers to show that 100% of tips and service charges after costs goes to staff.
As a business owner, follow industry guidance to be sure you are operating a fair and honest business. The general advice is to deduct only what your business incurs in card transaction costs to ensure that when the new law does come along, you will find yourself on the right side of it.
By Charlotte Anderson
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