BHA calls for new law on tipping and service charges

By Liam Garrahan contact

- Last updated on GMT

BHA calls for new law on tipping and service charges

Related tags: Service charges

The British Hospitality Association (BHA) has called for the Government to take action against restaurants and hotels who do not disclose how tips and service charges are distributed among staff by bringing in a new law that ensures total transparency on the matter.

The organization, which represents 40,000 hospitality businesses in the UK, is demanding that new laws are put into place which would mean that the hospitality sector will have to disclose how tips and service charges are distributed to the customer.

Although many hotels and restaurants have signed up to the organisation’s voluntary code of transparency on tips and service charges, the BHA want to make it a legal requirement so customers know what happens to their money.

The BHA’s letter to Secretary of State, Sajid Javid, outlines proposals to disclose:

  1. Whether an amount is deducted for handling costs (and how much).

2.   How the remainder is shared between the restaurant and the employees.

3.   The broad process for distribution, for example, that they are shared between the employees in the restaurant through a system controlled by a representative of the employees.

Ufi Ibrahim, chief executive of the BHA, said that the proposals are to make businesses transparent about where their customers’ money is going.

“Although restaurants are legally entitled to deduct administration costs from service charges, for example, we think it’s important the customers understands exactly how much is deducted and why,” she said.

“Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff.”

The Government has recently requested information on how staff tips are collected and distributed in what it calls the ‘abuse of tipping’ within the hospitality sector​.

The proposals follow heavy media scrutiny for restaurant groups​ who deduct administration charges from their employees’ tips, including Pizza Express and The Casual Dining Group who both later dropped these charges​, with Azzurri Group following​.

The scandal lead to other companies taking action with mobile payment company Zapper announcing that it would double staff tips on one day each month​ at the 800 restaurants who uses the app.

For more information on legal practices regarding tips read our Ask the Experts article here​.

Related topics: Legislation

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