Take a tip from us

Everyone enjoys a good meal out at a top-notch restaurant. Maybe you’ve just been paid; perhaps you’re celebrating an anniversary or Auntie Edna’s birthday. Whatever the occasion, if you’ve enjoyed good food (perhaps with a glass of wine or two, depending on Auntie Edna’s staying power) and received attentive service from your happy, smiley waiter, you may feel inclined to leave him a tip when the bill comes.

But where does the money you leave actually go?

If you leave cash on the table, you can (usually) assume that the waiter will be pocketing it with one hand while politely waving you off the premises with the other. But what if you leave a tip on a credit card machine? Where does that go? You might, quite reasonably, assume that the restaurant distributes any tips directly to their staff. It’s what most people think (and hope) to be true. It’s also probably what makes most of us keen to leave a tip.

And is this always the case?

It certainly isn’t. You may be surprised to hear that some restaurants (and we’re talking some major high street names here) withhold a percentage of tips from their staff to cover administrative costs – whatever they may be. Not that we’re at all sceptical – perish the thought – but aren’t they supposed to be covered by the bill?

But that’s not fair, we hear you cry. And that’s exactly what Business Secretary Sajid Javid thinks too, as he’s just ordered an investigation into the abuse of tipping as part of the government’s commitment to making sure everyone is paid fairly.

Making things fair

As things stand, there’s a voluntary code of practice in the hospitality industry which sets out four principles of transparency for businesses to follow:

  • To clearly display their policy on tips and gratuities before the point of purchase.
  • To have a process in place to deal with queries from customers about how tips and gratuities are distributed.
  • To ensure workers understand the policy on tips and gratuities, and can explain it to customers.
  • To inform staff on the distribution and breakdown of tips and gratuities, together with the level and purpose of any deductions.

This all seems perfectly clear and fair. So what could go wrong?

Well it’s voluntary, that’s what. Restaurants can choose to completely ignore these guidelines and it seems that many do just that, adopting their own tipping practices instead. Research has shown that as many as 20% of restaurants don’t pass tips to staff despite this being against the majority of their customers’ wishes.

So what can be done?

The government is looking into whether there should be a cap on the proportion of tips that restaurants can withhold from their staff to cover ‘administrative costs’. If you’re thinking that this should sort everything out and keep everyone happy, think again. Britain’s biggest trade union, Unite, begs to differ, claiming that by imposing a cap the government will in effect be legitimising the underhand practice of restaurants taking a slice of staff tips. And who would police such a rule with government agencies already stretched to the limit?

So will it be necessary for the voluntary code of practice to be strengthened? Perhaps the voluntary element will be removed and businesses will be forced to comply with the principles of transparency together with any others the government care to add.

A waiting game

Whatever the solution, all will no doubt be revealed in due course. The government’s call for evidence on how tips are collected and current tipping practices ends at 11.45pm on 10th November 2015. Watch this space…

More on pay and other terms of employment

Your server for this blog has been Simplify the Law. Service not included.

Donation-Tips 1

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