The British Hospitality Association has warned the government to tread carefully as they begin a consultation on proposals to make tips fairer for service staff today.

Under the proposals, all restaurants would be required to pay staff tips on top of the National Minimum Wage, instead of using them to make up the difference. They would also need to advertise their tipping policy on menus to “make it clear” to customers where their money is going.

The BHA however is urging the government to consider the effect such changes would have on restaurants currently subbing staff wages with tips, arguing that any decisions made must be ‘implemented in the right way’ to avoid further job losses in an industry already on the edge.

Bob Cotton, BHA chairman, said: “The industry is currently facing the huge challenge of increasing costs and a rapidly falling consumer spend. In order to reduce the risk of job losses and business failures, the industry needs time to adjust its financial and operational models.”

Jodie Sinclair, a partner at law firm Bevan Brittan echoed Cotton’s comments and added that companies failing to implement proposed changes could also suffer damage to their reputation.  

She said: “Arguably, the proposed changes will impact upon the quality of service with many employers trying to rely on less staff with the hope that this will mean less financial burden for each shift.

“Reputational damage and adverse publicity are likely to follow for those organisations who get it wrong or try to flout any of the changes that may come through. How will this be policed and what are the penalties? How will these changes impact upon the industry's ability to deliver a world class service as we approach London 2012?”

In order to prepare its members for the change, the BHA is working on a best practice guide to ‘boost customer confidence’ and ‘enable the hospitality industry to demonstrate its commitment to transparency.’

Despite the BHA’s concern for the welfare of the industry, Unite the union has described the current method of topping up wages with tips as ‘disgraceful’, and has called on the government to take ‘urgent action’.

Derek Simpson, Unite joint general secretary, said: “The union will not accept a situation whereby the industry which has so far publicly denied the concerns of their staff and customers around tipping, to merely go on regulating themselves. Government action is overdue as staff must not be forced to wait on their employer. This will ensure rogue employers can no longer use money left by their customers, to thank those who served them, to boost their profits.”

The Government will hear a range of opinions on the subject before closing the consultation on 16 February 2009. When changes to the law do take effect, a Code of Practice could be distributed to provide guidance on issues such as how to distribute tips and to inform customers about their tipping policy.

What do you think? Should employers be forced to give staff tips on top of their wages, or will the changes spell disaster for financially struggling businesses? Click here to leave your opinion.

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