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Time for the industry to come clean over tipping

29 May 2008

Every restaurant and hotel has a different policy covering distribution of tips, it seems. And the customers are confused. Very confused. Nic Paton reports

Earlier this month the British Hospitality Association (BHA) sent out a survey to 150 restaurants in order to find out what their tipping policy was and how tips got used. "We had 148 back and every one was doing something different," revealed chief executive Bob Cotton.

This illustrates just what a complicated (and emotive) issue tipping is for the restaurant industry. What's more, in public relations terms, it is a headache that refuses to go away, most recently with the launch of a campaign by trade union Unite and the Daily Mirror newspaper to get restaurants and hotels to sign up to a "Fair Tips Charter" (see below).

Legal cut

Unite's long-running campaign aims to stop restaurants - completely legally - taking a cut from credit card tips and, more damagingly in PR terms, using tips to take hourly wages up to the minimum wage. Last September, it held protests outside a branch of Pizza Express and Smollensky's on the Strand in London.

TGI Friday's and Pizza Hut were among the first to pledge their support for the Unite campaign.

According to Gavin McGlyne, HR director for TGI Friday's UK, signing the charter was simply about making a public statement of where the business stood on tips to staff.

"It is shocking that so many restaurants rip off their guests by taking a slice out of the tip that the guest believes they are giving to their server," he said.

Alasdair Murdoch, chief executive of Pizza Hut in the UK and Ireland, agreed. "We have been calling for an industry commitment to pass on all tips directly to staff, as customers would expect, and we hope that this charter is the first step to a national scheme that recognises good practice in our industry," he said.

But it is very easy for the media to portray restaurants as the bad guys in all of this, according to Peter Davies, senior manager for tax disputes and litigation at advisory firm Vantis. Davies, who last year successfully helped an unnamed London restaurant in a tribunal case against HM Revenue & Customs over the minimum wage and tronc payments, stressed once again that restaurants were not doing anything wrong legally.

What would probably help, though, Davies admitted, was better communication by managers and owners to staff, particularly on the administration costs surrounding running a tronc scheme, and better communication to customers about how tips were used.

"If a customer says to a waiter, ‘Do you get all the tip?' and the waiter says ‘no', the customer is going to think they are being exploited," Davies said. "But it may well just be because the tip goes into a tronc so that chef, kitchen porter and receptionist get something, too. So it's true the waiter is not getting it all, but it is not because they are being exploited."

Nevertheless, there does appear to be momentum for change. An Early Day Motion backing the Unite campaign has been put down in Parliament by Labour MP Michael Connarty, which has so far secured 63 signatures in support.

Government support?

And the Government last month gave its clearest signal yet that it might be prepared to wade in. In a response to a Parliamentary question, Business Secretary John Hutton said the Government was "seriously looking into" the issue.

Dave Turnbull, organiser at Unite, confirmed that the union was talking to ministers about getting the laws governing the minimum wage changed to ensure tips could not be used in this way. "We are getting very strong messages from the Government that this is going to happen," he said.

But such a regulatory move fills industry leaders with horror. Cotton revealed that the BHA was already working with the Department for Enterprise Business and Regulation to set out some form of self-regulation.

"The starting point is simply to work out what are the range of practices and then we want to start a discussion with the Government about what is the best way forward," Cotton said. "If it was a simple issue, it would have been fixed years ago. We want to see if there is some form of words that can be used on menus so that people can understand what is going on."

Another finding from the BHA survey was that the minimum most people were earning was about £8.50 an hour, well above the minimum wage.

"It is not about money," Cotton said. "It is a transparency issue, not a pay issue."

Want to read more?

Got to www.caterersearch.com/tronc

Unite's Fair Tips Charter

â- Reach agreement on how tips are shared with those staff directly affected.

â- Make no deductions from tips or salaries to cover breakages, till shortages or customer walk-outs.

â- Make all rules for the distribution of tips and service charges available in writing for staff and customers on request.

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