Do you think the new Employment Allocation of Tips Act will genuinely work in redistributing the fair share of tips?
I don’t believe this legislation touches the surface of the subject. I think it addresses principally what you said at the beginning of our discussion, which is where tips and service charges are distributed to staff, that they’re distributed fairly, but I don’t think it addresses fairness, in respect of all the people involved in transactions.
Why not?
First of all, particularly with small businesses, where the owner actually operates in the business, it doesn’t seem there is anything in the legislation, which gives an allowance for the owner of the business to participate in the distribution.
If we’re using the word fairness, I think one needs to address the different angles. In terms of fairness to the customer, I’ve never felt that having tips and service charges put on a bill before it’s given to the customer is necessarily fair. We’ve got to a situation now, where restaurants put how much they want you to tip on the bill. So it’s not necessarily a choice, first of all, whether or not to tip and secondly, how much to tip.
It’s also not necessarily a choice as to who gets the tips. You may or may not be told that it goes to the staff, but which staff and how much goes to which staff? In some organisations, it might go to service staff and in others also to kitchen staff or further than that. It’s not necessarily fair if you’re excluded from receiving tips, as there may be significant differences between their earnings and someone else’s.
From the employers point of view, and I think this is the biggest issue about this whole thing, there’s the fact that the employer is not able to put together a proper package of what you’re going to earn, they can’t guarantee how much you’re going to get out of tips and service charge. So a significant part of the earnings, which you would like to build into your terms of employment, you’re not allowed to control.
The code of practice has not been published yet, but do you think that it will say that tips have to be allocated among all workers?
From what I’ve seen so far, the legislation talks about having to be fair to employees. And there are all sorts of reasons why in some organisations, the chefs in the kitchen are paid through wages, and the service staff are involved in the tronc.
As of now, there’s no UK standard if you’re a guest as to when you go into a restaurant or a hotel, whether or not there’s a service charge already on your bill.
So you end up with a law that is trying to govern both what the guest does and what the business does. Where do you draw the line about what should be legislated for and what should be a code of practice which allows for people to do what they want to do in their business with their employees? I see the legislation potentially tipping too far in the wrong direction.
Are service charges and tips the same thing?
In my view and from experience in the past, they are not the same thing. Service charge is often something which the business decides to add to cover costs. It might include the staff and might include such other things as breakage in glassware or losses of cutlery. Tips are volunteered by the guests. But now the new legislation says that they are the same.
What do you think the industry reaction will be once the bill is implemented next year?
Well, a few weeks ago HOSPA had a debate about this particular legislation and a reasonable number of people within the industry participated. And from that event we’ve seen that a number of people were just realising the fact that the legislation was actually happening. There’s also the matter of what will happen if they don’t change their own practices well in advance of the legislation becoming compulsory?
