Government to ban restaurants from taking cut of staff tips

By Sophie Witts contact

- Last updated on GMT

Government to ban restaurants from taking cut of staff tips

Related tags: tipping, Government, Legislation, Restaurant, Public house, Hotel

Restaurants will be legally banned from deducting money from staff tips under plans to be announced by Theresa May today (1 October).

Details of the legislation are yet to be confirmed, but owners will have to ensure the entire service charge is passed on the waiters and back of house staff.

May will say the “tough” new legislation is part of a push to encourage fairer working practices.

But trade body UKHospitality says the plans place an "unnecessary burden" on businesses and it has already developed a tipping Code of Practice approved by Unite.

"Some smaller businesses may retain a small proportion of tips to cover the costs of credit card charges and processing payments - but this is a small amount and the practice has been approved by Unite," says Kate Nicholls, UKHospitality chief executive.

"At a time when costs are mounting for operators in the sector, the Government must be careful about introducing additional legislation."

The belated announcement comes two years after a Government consultation first recommended the move. 

It follows growing public scrutiny over a perceived lack of transparency in restaurants’ tipping policies.

In 2015 chains including Pizza Express and Las Iguanas came under fire for leveraging an administration charge on card tips to cover the costs of running a tronc system.

But companies such as Pizza Express and Casual Dining Group later removed the charges ​following a major backlash.

Last year Zizzi said it would reconsider the wording of its cash handling policy​ after a BuzzFeed report claimed it used staff tips to cover “mistakes” such as customers leaving without paying.

And in May staff at two branches of TGI Friday’s walked out following a row over changes​ to the group’s policy which they claimed would take tips from waiting staff to top up the wages of back of house workers, instead of giving them a pay rise. TGI's said the changes were in "the interest of fairness" based on "research in to industry norms".

No timeframe has yet been given for when the legislation will come in to force.

A spokesperson for Casual Dining Group - which operates brands including Café Rouge, Bella Italia and Las Iguanas - said the company was disappointed by the Government's "inaccurate and ill-informed" comments.

"Our staff keep 100% of cash tips, and 97.5% of credit card tips, after a 2.5% administration charge to cover credit card and banking administration charges. Our staff are at the heart of our business, and are well paid.  Our policy on tips is in line with government sponsored guidance issued in 2009 and which was approved by Unite and HMRC.”

Related topics: Business & Legislation

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