Catering staff at the luxury retailer have threatened to strike over claims that Harrods keeps up to 75 per cent of gratuities from its restaurants and cafes.
The United Voices of the World Union (UVW) – which represents Harrods’ 483 restaurant employees– says that the practice is costing workers up to £5,000 a year in lost wages.
Harrods uses a Tronc system, where the 12 per cent service charge is distributed among staff by an appointed troncmaster.
But when contacted for comment the store, which is owned by the Qatar Investment Authority, declined to reveal the proportion of tips it paid to employees.
Staff take charge
Petros Elia, general secretary of UVW, told BigHospitality the union wanted the store to allow staff to elect their own troncmaster to increase transparency over the way tips are shared.
“At the moment that troncmaster is appointed and is afforded considerable discretion which is of great concern to staff," said Elia.
"Our members believe that, since it is their hard work that is being rewarded, they deserve 100 per cent of the service charge.
“We are…calling for the election of a Tronc committee to monitor, evaluate and report on the activities of the troncmaster in order to ensure fairness, accountability and transparency."
‘Shift the burden’
The British Hospitality Association’s (BHA) Code of Practice states that it is reasonable for businesses to take a portion of the service charge to cover the administration of running a Tronc.
But Elia argued that Harrods, which saw turnover rise to £788.9m in the year to 30 January 2016, could afford to absorb the costs.
“The service charge and the tipping system generally is a means for Harrods and other restaurants to shift the burden of paying a decent wage from themselves on to the customers," said Elia.
"As such, they would still be making a massive saving for themselves were they to absorb the administration costs which is far lower than paying, for example, every staff member the London Living Wage of £9.75 per hour.”
There are more than 20 cafes, restaurants and bars operating in Harrods, and the store has submitted plans to open its first late-night restaurant in the basement space currently occupied by its fine-wine department.
A Harrods spokesperson said: “Harrods is taking steps to improve the current system through which it distributes its service charge, to ensure it best serves our employees and is completing a detailed review into the existing scheme.
“As this is an on-going review, we are unable to provide further details on the distribution. However, employees will be informed of the details of the new system as soon as the review is complete.”
But Elia said that the retailer would have to justify its position if it continued to take a cut of the service charge in future.
"Our members would then consider Harrods' position before taking any industrial action," he said.
"Industrial action is always a last resort."
The dispute follows protests over changes to tipping practices at luxury store Fortnum & Mason in December.
In 2015 Casual Dining Group - operator of the Bella Italia, Cage Rouge and La Tasca brands - scrapped all administration charges on staff tips following major public backlash.