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Government's short consultation period for tips and service charge leaves operators outraged

06 May 2016 by
Government's short consultation period for tips and service charge leaves operators outraged

The length of time the government has allowed the hospitality industry to respond to potentially far-reaching changes to the way in which it regulates tips and service charges is an "outrage", according to one veteran restaurateur who is among several industry figures to express their disappointment at how little time they have to respond.

The government announced the outcome of business secretary Sajid Javid's eight-month review of tips, service charges and troncs on bank holiday Monday this week (3 May).

As a result of the review, the government has put forward a raft of proposals, which could see restaurants hand over all tips to their employees. It has also suggested that charges imposed on staff tips by employers should be scrapped or limited (except for those required under tax law), and that service charges on customers' bills should also be clear and voluntary.

The government is also considering:

  • whether to ban or restrict the levying of table sales charges on staff - a fee paid by waiting staff based on their sales during a shift;
  • how to incentivise and increase the prevalence of well-managed tronc systems;
  • updating the current voluntary code of practice and putting it on a statutory footing to increase employer compliance

However, Joel Kissin, who runs Boulestin restaurant in London's St James's and is the former managing director of Conran Restaurants (now D&D London), said that he was "kind of outraged" by how short the consultation period was.

"Why is there such a short consultation period when there is going to be such a major impact on the industry?" he asked. "This is a complicated area and we need more time to get our industry to respond correctly on this. They released this on a bank holiday Monday. In America they call that 'taking out the trash' - you release stuff that you don't want people to really notice much. I think it is somewhat dishonest."

His concerns were echoed by Harry Murray, chairman of Lucknam Park hotel and spa in Colerne, Wiltshire. "This response needs to be delayed and discussed across all sectors of the hospitality industry," said Murray. "We cannot sit back and allow government to make the decision. If we are to improve the industry, this is an opportunity to ensure complete transparency for all stakeholders."

Meanwhile, tax expert Howard Field, who is part of the Tourism and Hospitality Special Interest Group Committee of the Institute of Chartered Accountants in England and Wales, also warned that the consultation period left little time to tackle such a complex issue.

"The handling of tips, service and cover charges is a subject that is riddled with out-of-date practices, lacking any common standards and confusing to all of the parties involved. It cannot properly be dealt with in such a short space of time with such limited relevant input," Field said.

He added in an article posted on LinkedIn that the length and scope of the government's consultation on tipping, gratuities, cover and service charges "does more to illustrate the complexity of the subject than it does to identify and address the fundamental issues".

The Caterer contacted the government's department for Business Innovation and Skills, and in response to the industry's concerns it said: "This is an important issue and the government is determined to make sure workers who earn a tip are able to keep it. This eight-week consultation gives all parties time to share their views on our proposals."

Restaurants may be forced to hand over all tips to employees, following government review >>Zizzi to split service charge equally between waiting and kitchen staff >>

Leader: Let's be clearer with staff and customers regarding service charge and tips >>Latest video from The Caterer

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