The Government is to launch an investigation into the issue of tipping across the sector after a string of high street restaurants were accused of misleading diners by subsidising wage bills with service charges.
Business Secretary Sajid Javid said: “I’ve ordered an immediate investigation to look at the evidence and consider the views of employees, customers and the industry to see how we can deal with the abuse of tipping.”
The investigation will look at how restaurants treat tips left by customers and whether Government intervention is necessary to strengthen the voluntary code, which is currently overseen by the British Hospitality Association (BHA).
The consultation, which is set to run until 10 November, will consider whether there should be a cap on the proportion of tips restaurants can withhold from staff for administrative costs and, if so, what this level should be.
Javid said: “When a diner leaves a tip, they rightly expect it to go to staff, in full. I’m concerned about recent reports suggesting some restaurants pocket tips for themselves. That’s just not right.
“I’ve ordered an immediate investigation to look at the evidence and consider the views of employees, customers and the industry to see how we can deal with the abuse of tipping. As a One Nation government we want a fair deal on pay for working people and that includes taking action on tipping abuse.”
Reports this morning suggest that the Prime Minister David Cameron is taking a particular interest in the issue.
Over the last month, operators including PizzaExpress, Cote, Bill’s, Las Iguanas and Prezzo have come under the national media spotlight for the way tips are collected and distributed, and in dome cases the use of the service charge for “administrative costs”.
Research from 2009 found that one in five restaurants did not pass tips to their staff, yet the vast majority of customers said they wanted waiting staff to receive tips left for them. More than three quarters wanted to see the restaurant’s tipping policy clearly displayed.
Last week, the Association of Licenced Multiple Retailers (ALMR) wrote to Javid, the Secretary of State for Business, Innovation and Skills, on the issue of tips, gratuities and service charges.
The letter from ALMR chief executive Kate Nicholls highlighted to the minister that there are good reasons why tips are collected in and redistributed – and that this has got lost in the media debate. It also said that there needs to be more transparency and clarity for staff and customers about where the money is going and why.
