Ban on restaurants taking staff tips 'kicked into long grass'

Tom Belger
Finance and policy reporter
Labour leader Jeremy Corbyn and MP Laura Pidcock support staff keeping all their tips. Photo: PA

Labour has accused the government of “kicking into the long grass” a law that would ban firms from pocketing staff tips, four years after a scandal involving major restaurant chains first sparked promises of reform.

long-awaited new law would ensure workers received tips in full, with a government spokesman confirming for the first time since Boris Johnson became prime minister that it remained on the agenda – but gave no timescale for action. One Whitehall source said there were plans to introduce legislation “as soon as possible.”

Many well-known restaurants have come under fire for taking a cut from card tips intended for staff, with a string of controversies going back more than a decade.

READ MORE: Revealed — MPs' two decades of failure to stop restaurants pocketing staff tips

Chains including Cafe Rouge and Bella Italia allegedly used tips to top up the minimum wage until the practice was outlawed in 2009, and were then accused of taking a 10% cut from service charges when tipping hit the headlines again four years ago.

Other firms faced claims staff had to “pay to work”, with a 3% fee on their sales regardless of the tips they actually received. Las Iguanas reportedly reversed the policy under public pressure.

Cafe RougeBella Italia and Las Iguanas now say they take only 2.5% of card tips to cover credit card fees and admin costs, with the rest going to staff in full.

More than four years have now passed since the controversies led then-business secretary Sajid Javid to start an investigation and pledge “action on tipping abuse” under David Cameron’s government in August 2015.

READ MORE: Law forcing firms to compensate cancelled shifts could hand workers £1.5bn a year

Cameron’s successor Theresa May eventually pledged to legislate at the last Conservative conference in October 2018, but one year on there is still no sign of the new bill.

Laura Pidcock, Labour’s shadow employment rights minister, told Yahoo Finance UK: “It’s been four years now that we’ve been waiting for [the department for business, energy and industrial strategy] to take action to make sure waiting staff get their full tips.

“During that time, all we’ve seen from government ministers is delay after delay, excuse after excuse, kicking this important issue into the long grass.”

Pidcock said a government led by Labour leader Jeremy Corbyn would legislate to stop tips being “hoovered up by bosses.”

Chancellor Sajid Javid pledged action on tipping 'abuse' as business secretary in 2015. Photo: Ben Stansall/AFP/Getty Images

Dave Turnbull, Unite’s lead hospitality officer and a campaigner on the issue, claimed recent delays could reflect lobbying from firms.

He said firms were suggesting it was the wrong time to raise costs, given recent minimum wage increases, Brexit recruitment problems and high-profile restaurant closures like at Jamie’s Italian.

“There is a long history of promises being made to resolve this, and then backing off and leaving the industry to sort itself out. Clearly they can’t be trusted, so there needs to be legislation,” said Turnbull.

Two sources told Yahoo Finance UK work was well underway within government, but it has not even published its response to a consultation held more than three years ago.

Issues holding up the bill could also include the government’s all-consuming focus on Brexit, its previously slim and now evaporated majority in parliament or the conventional need for a Queen’s Speech to introduce major reforms.

READ MORE: One in seven hotel and restaurant staff ‘receive no paid holiday’

The relevant web page still encourages stakeholders to “visit this page again soon to download the outcome to this public feedback.”

But many leading chains have slashed their fees on administering tips since 2015, with several now taking a much lower share of service charges.

Kate Nicholls, chief executive of UK Hospitality, said the leading industry body had “not seen evidence of widespread misuse or staff being routinely denied tips.”

She said tipping policies should be “transparent and fair” for front- and back-of-house staff. But she said it could be achieved by following her own organisation’s code of best practice, drawn up with Unite, rather than a new law.

Nicholls warned: “Legislation is an unnecessary step that would add yet further burdens to hard-pressed employers.”

Tips left in cash almost always go directly to staff. Photo: PA

A spokesman for Casual Dining Group, which owns Cafe RougeBella Italia and Las Iguanas, said their tipping policies were clearly set out online.

Its website says: “All customer cash tips and service charges are kept by restaurant employees in full.

“When tips or service charge are paid for by a credit card or debit card, we take a small 2.5% administration charge to cover bank fees, before distributing the remainder in full to our employees.”

It adds that tips and service charges are paid on top of the minimum wage. The group also says it fully supports UK Hospitality’s code on fair tipping, and offers staff a 50% discount, team meals on duty and other perks.

A spokesman for the Department for Business, Energy and Industrial Strategy said: “We want workers to get the tips they deserve, and to give consumers reassurance that their money is rewarding staff for hard work and good service.

“That’s why we will make it law that all tips left to workers go to them in full.”