Tips should go to workers, not employers, says government report

Charges on gratuities in restaurants, hotels and bars should be scrapped or limited, according to a review of tipping practices

Tips in restaurants, hotels and bars should go to workers and not their employers, the government said in a report published on Monday.

After an eight-month review of tipping practices, the government said charges imposed on staff tips by employers should be scrapped or limited. Service charges on customers’ bills should also be clear and voluntary, the proposals said.

The business secretary, Sajid Javid, launched the investigation last August after some of Britain’s best-known restaurant chains were exposed for withholding some or all of the service charges from staff – often without customers’ knowledge.

Unions accused businesses such as Pizza Express and Giraffe of abusing the 2009 voluntary code set up to stop tips being used by employers to meet the minimum wage. Pizza Express, which took 8% of tips paid on a card, and Giraffe, which charged 10%, have since stopped doing so.

Chains such as the Mexican street food outlet Wahaca and Jamie Oliver’s Jamie’s Italian have also deducted a percentage of waiters’ card sales to be shared with other workers, but other restaurants have used tips to pay for breakages, till shortfalls and customers failing to pay.

Waiting staff
The government is considering banning emplyer deductions from tips. Photograph: Alamy

The government is seeking views on options to ensure staff get more of their tips including:

  • Banning employer deductions from discretionary service payments other than for tax.
  • Limiting such deductions to the cost of processing credit card tips and dealing with the payment through payroll.
  • Banning or restricting employers from charging waiting staff a percentage of their table sales during a shift.
  • Encouraging properly managed “troncs” – arrangements for sharing tips administered by a staff member, not the employer.

Publishing the report, Javid said: “We want workers who earn a tip to be able to keep it. That’s why I, like many others, was disappointed by the tipping practices of some of our well-known chains. This has to change.”

Javid said the government would decide whether to make changes by revamping the 2009 code or, to give the rules more weight, enshrining them in legislation.

The Unite union, whose campaign helped expose restaurant chains’ treatment of tips, said the report was a “massive, rightful victory” and called on Javid to change the law instead of relying on the voluntary code.

Dave Turnbull, Unite’s officer for the hospitality industry, said: “The problem has always been that tips paid on a credit card and service charges are deemed the property of the employer. Until staff are recognised as the lawful owners of their hard-earned tips with complete control over how they are shared out, rogue employers will continue to cream off staff tips.”

The proposals also attempt to clear up confusion and dubious practices around service charges added to bills that often go to the employer and not staff. There is no legal requirement for any part of these optional payments to be paid to employees.

The government said customers often did not understand the charges were at their discretion and that they deterred diners from leaving a tip on top. Businesses could be banned from adding a service charge or forced to make it clearer that the charge is discretionary.

Cover charges imposed by the restaurant also need to be made clearer so consumers know what they will pay, the government said.

  • This article was amended on 3 May. Pizza Express and Giraffe have confirmed that they no longer take a percentage of tips paid on credit cards.


Sean Farrell

The GuardianTramp

Related Content

Article image
First UK strike action over restaurant tips looms at TGI Friday's
Staff to be balloted over chain’s plan to give service charge cash to kitchen staff in lieu of pay rise

Sarah Butler

11, Apr, 2018 @5:56 PM

Article image
UK restaurants to be banned from keeping staff tips
Under new legislation businesses will no longer be able to take share of service charges paid by card

Sarah Butler

23, Sep, 2021 @11:01 PM

Article image
Technology has created more jobs than it has destroyed, says 140 years of data
Study of census results in England and Wales since 1871 finds rise of machines has been a job creator rather than making working humans obsolete

Katie Allen

18, Aug, 2015 @6:00 AM

Article image
Government inspectors should enforce workers’ rights, says Law Society
Legal body responds to concerns over ‘gig economy’ firms such as Uber and Deliveroo amid slide in tribunal cases

Sarah Butler

21, Jun, 2017 @6:29 AM

Article image
UK's anti-immigration stance is bonkers, says restaurant group owner
David Loewi of D&D London says putting up barriers to employing workers from Europe would halt growth of businesses

Sarah Butler

13, Oct, 2016 @4:57 PM

Article image
Alec and James Reed: recruitment is just the job for father and son
Reed saw vacancies plunge during the recession. Now it's hiring again and helping the government get the long-term unemployed back into work

David Teather

03, Jun, 2010 @7:29 PM

Article image
Manufacturing and finance job losses blamed for falling real-term wages
Long-term decline in factory vacancies and rise in jobs such as barista has kept average wage growth below inflation, says IDS

Phillip Inman, economics correspondent

04, Sep, 2014 @4:14 PM

Article image
UK employers 'pause' job hiring as demand falls to seven-year low
ManpowerGroup says Brexit and global trade woes have dented business confidence

Phillip Inman

10, Dec, 2019 @12:01 AM

Article image
London suffers worst fall in job vacancies among major European cities
Covid-19 restrictions weigh heaviest on capitals with large retail, leisure, hospitality and office sectors, study shows

Richard Partington Economics correspondent

30, Nov, 2020 @6:01 AM

Article image
Wage growth, the fatal flaw in George Osborne's economic storyline
The chancellor wants a precarious workforce, scared of its own shadow, reluctant to ask for a pay rise

Phillip Inman Economics correspondent

06, Mar, 2016 @1:00 PM