Government tipping report cautiously welcomed by hospitality groups

By Hannah Thompson contact

- Last updated on GMT

Government tipping report cautiously welcomed by hospitality groups

Related tags: Service charges, Government, Restaurant

Hospitality groups have welcomed the Government recommendations that restaurants and bars should not take deductions from staff tips, and that all tips left by customers should be collected directly by staff.

The British Hospitality Association (BHA), the Sustainable Restaurant Association (SRA) and the Association of Licensed Multiple Retailers (ALMR) have all come out in support of the announcement, which came from business, innovation and skills secretary Sajid Javid on 2 May this week.  

The recommendations come following the Government’s investigation into hospitality tipping policies, after many restaurant groups were criticised last year amid allegations that many tips and service charges do not actually go to staff.

Groups were also condemned for apparently hiding this practice, and encouraging staff to let customers think they receive all tips.

Ufi Ibrahim, chief executive of the British Hospitality Association (BHA) has especially welcomed the calls for greater transparency on tipping. She said: "Transparency is precisely what we asked the government to consider. Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff."

She added: "Many restaurant customers struggle to understand the difference between a tip and a service charge. What’s more they aren’t always [aware of] what happens to the extra money they leave at the end of a meal. We believe restaurants should have to provide a written notice explaining exactly what happens to service charges and tips.”

Mark Linehan, managing director of the Sustainable Restaurant Association (SRA), said: “The Government’s review of tipping and service charges is a very welcome step towards ensuring a fairer deal for the 600,000 people working in the industry and the millions of people who eat out every day.”

Kate Nicholls, chief executive of the ALMR, agreed with the policy of ensuring that staff receive tips, but she added that businesses should not be penalised for legal behaviour (such as collecting tips into a tronc).

She said: “No company should be profiting from tips and service charges, but equally no company – particularly small businesses – should be penalised for collecting and processing tax on behalf of the Government.”

The new report

In his ministerial foreward to the report on the​ Government website, Javid summarised his view on the issues, stating: “Like many of us I was surprised to learn of claims that some employers, including some of our most well-known high street chains, were acting unfairly when it came to discretionary payments for service.”

He concluded: “Underlying all our proposals are the objectives that all discretionary payments for service should be voluntary to the consumer; all discretionary payments for service should be received, in full, by workers where appropriate; and the allocation of such payments are transparent to the consumer who makes them.”

Businesses also have a responsibility to be “clear and transparent to consumers and workers in terms of how the payments are treated”, the report said.

The government is now seeking responses to the report before 27 June, with a summary of the responses, and further recommended steps, to be published soon after.  

The original controversy

The tipping controversy began in August last year with French-style brasserie Cote, but quickly spread to other businesses including Las Iguanas and Turtle Bay after restaurants and bars were accused of misleading customers about the true recipients of their tips.

Many customers were said to believe that any service charges paid as part of the overall bill would go directly to staff, as would any cash tips left at the table, but this was not always true, it was alleged.

The lack of awareness about the difference between service charge, tipping, cover charges, cash and card payments, and the use of a tronc (an official system where tips are pooled and then re-distributed among all staff) – and the need for employers to be transparent about each ‒ was also highlighted as an issue.

Although tipping in the UK is still largely at the business' own discretion, some have called for a ban altogether, with some restaurateurs, such as US-based Danny Meyer, deciding to eliminate the practice from their sites in exchange for higher prices and raised staff wages.  

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