Unite union targets PizzaExpress to highlight tipping point

06 August 2015 by
Unite union targets PizzaExpress to highlight tipping point

Workers' union Unite is campaigning against PizzaExpress to force the company to scrap its policy of deducting 8% from tips paid to staff on credit cards.

Acting on behalf of its members, Unite is organising demonstrations outside a number of PizzaExpress's 430 outlets. The first was held on National Waiters' Day outside the flagship restaurant in London's Leicester Square. More are planned on 10 August in central London and Norwich, with others being announced at "short notice".

PizzaExpress, which outlines its policy on its website, is not alone in charging administration fees. Strada, Ask, Zizzi and Tragus Group are among those chains that also deduct an administrative charge. In some cases, they charge up to 10% to cover credit card fees, payroll and processing costs. These companies operate a tronc system whereby tips, gratuities and service charges are distributed by a tronc master or committee, usually comprised of employees. However, the employer can retain some of the monies to cover administration costs.

Unite regional officer Dave Turnbull, said: "We are highlighting PizzaExpress because we believe they should take a lead on this matter on their 50th anniversary and staff feel that abolishing this unfair fee would be a great way of rewarding their contribution to the company's ongoing success. However, we will definitely by turning our attention to the other companies that also do this in the coming months."

PizzaExpress has hit back, saying the benefit of a tronc system is that "tips made by electronic card payment and discretionary service charges, are paid without the deduction of National Insurance Contribution (NIC). Therefore, our restaurant teams are charged an administrative fee of 8%, compared to the higher rate (12.8%) which they would otherwise be required to pay through NI".

He claimed that some restaurant staff don't work enough hours to pay NIC in the first place so they are 8% worse off, and added: "PizzaExpress has a choice - it can add an administration fee or not - and it chose to add a fee on its employees' hard-earned tips. We think this is unjustified and unfair."

He also highlighted the fact that some restaurant companies, such as the Restaurant Group, make the usual tax deductions but don't deduct administration fees.

A spokesperson for PizzaExpress said: "All cash tips go straight to the waiters who've earned them. It is then their responsibility to ensure that they declare any earnings they've made through cash tips to HM Revenue and Customs so they can be appropriately taxed.

"To cover the administrative costs of ensuring that the tronc system is managed correctly and fairly and so that we meet our legal obligations as an employer, a small administration fee of 8% is levied on the tronc. Under no circumstances does PizzaExpress generate additional profit through the system.

"We went to great lengths to set up this tronc, which is chaired by a troncmaster and run by a committee of waiters and pizzaiolos who decide how tips made by electronic card payment are distributed between front and back of house restaurant team."

The spokesperson added: "We already offer competitive rates of pay to all our staff, and tips are made in addition to that, along with further benefits and rewards."

Tronc schemes can take advantage of favourable rules which mean that, subject to meeting certain conditions, payments made by the tronc are free of NI contributions, which saves the employer and employee more than 25% in tax. Tronc schemes tend to be run through the employer's own payroll system with no second payroll or separate registration with HMRC required

Tipping: compulsory or discretionary service charge? >>

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