THE BRITISH Hospitality Association has called for a new law to ensure restaurants and hotels provide clearer information on tips and service charges.
The move raises questions about the success of the industry’s voluntary code on tipping transparency, which has been in place for six years.
A number of high street chains have been in the spotlight of late for snaffling a percentage of tips for themselves. The Department for Business, Innovation and Skills recently launched an investigation on the extent of abuse in the system.
The BHA now wants the government to introduce legislation to make businesses reveal exactly what happens to the “extras” diners pay at the end of a meal.
Business secretary Sajid Javid is apparently “excited” by the initiative, Footprint understands.
It isn’t clear what has prompted the BHA’s push for regulation. Poor uptake of its voluntary code of transparency on tips and charges is one possibility – especially at a time when the industry is under scrutiny from Whitehall.
BHA claimed that “many” of the restaurants and hotels among the 40,000 establishments it represents have signed up since it was launched back in 2009, but a spokeswoman was unable to provide a more accurate figure.
BHA chief executive Ufi Ibrahim, who has written to Javid outlining her plans, said: “Although restaurants are legally entitled to deduct administration costs from service charges, for example, we think it’s important customers understand exactly how much is deducted and why.”
Since 2009 it has been illegal for restaurant owners to use tips and service charges to bring wages up to the national minimum wage.
Service charge usually goes into a ‘Tronc’ – which is then distributed among waiters, front of house and the kitchen team – allocated according to arrangements agreed by the staff. Some major high street chains have been criticised for taking a chunk of staff tips as an “admin fee” for running the system.
BHA wants restaurants to disclose the following, by law:
- Whether an amount is deducted for handling costs (and how much);
- How the remainder is shared between the restaurant and the employees;
- The broad process for distribution, for example, that they are shared between the employees in the restaurant through a system controlled by a representative of the employees.