The warning came from the Association of Licensed Multiple Retailers (ALMR) yesterday (10 November) when Business Secretary Sajid Javid's investigation into what the Government called it's 'abuse of tipping' within the hospitality sector closed.
ALMR chief executive Kate Nicholls said a refresh of the code of practice, introduced in 2009, was welcomed, but that major legislative changes would be a knee jerk reaction to 'inflammatory' reports of bad tipping practice.
“The ALMR has carried out a widespread survey of members, including leading casual dining businesses, and found extensive awareness of the current code and compliance with it," she said. "Much of the reporting of tipping practice has been inflammatory, based on anecdotal evidence and unhelpful in its effort to address any perceived problems.
“We have found no evidence of poor practice but there is a clear misunderstanding from consumers, the media and some staff members as to how tips are redistributed. The consultation presents us with a chance to modernise the code, to better reflect contemporary payment practices such as cashless, and clear up any grey areas."
The ALMR's advice conflicts with that of the British Hospitality Association (BHA), which last month called for a new law around tipping and service charges.
The BHA, which represents 40,000 hospitality businesses in the UK, said it wanted to the Government to introduce legislation to improve transparency around the practice and make businesses reveal exactly what happens to the ‘extras’ customers pay at the end of a meal.
“For us it’s all about transparency,” said BHA chief executive Ufi Ibrahim in a letter to the Business Secretary.
“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.
“Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff.”
Many casual dining chains have received unwelcome press coverage about their tipping practices in the last few months with Las Iguanas, Cafe Rouge and La Tasca operator The Casual Dining Group, pledging to scrap administration charges on processing tips following coverage.
However, Nicholls said legislative changes could 'add to the confusion' and also take away employers' rights to reward staff in the way that suited their business.
"Hospitality businesses facing shrinking margins require a degree of flexibility to reward their staff in the way that best suits their business model and there is little justification for large-scale intervention," she said.
"Intrusive regulation of employer practices regarding distribution of tips may well undermine the sector’s ability to push growth and inhibit investment.
“The system is in place to reward staff members who contribute to a great customer experience and wholesale changes may see those employees suffering as a result.”