Restaurant – management take a % of the service charge – allowed?

Homebox Ask Money Restaurant – management take a % of the service charge – allowed?

This topic contains 1 reply, has 2 voices, and was last updated by  Dave Turnbull 1 year, 10 months ago.

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  • #671

    Snow leopard
    Participant

    I work in a restaurant. If customers pay tips on card, the restaurant keeps some of it so we don’t actually get what they tip! Is that allowed? What can we do?

  • #672

    Dave Turnbull
    Participant

    My name’s Dave Turnbull, I’m a Regional Officer with responsibility for the hospitality sector within Unite the union. (http://www.unitetheunion.org)

    At the moment, unfortunately, it’s perfectly legal for restaurants to keep some or even all of the money if customers tip on card.

    We’re campaigning to make this illegal though. So the best thing you can do is join the campaign! If you’re not a member of the union already, you can find out more here and get involved by emailing dave.turnbull@unitetheunion.org

    We’ve had some success with this in the past.

    We had a campaign in 2016 against the 8% admin fee that Pizza Express were charging. We kicked that off on National Waiters Day last year, in May, and used the same tactics as we had used on the tips / minimum wage issue back in 2009. More restaurants were exposed for doing this and again there was huge media interest and public outcry. Giraffe were the first to break rank and abolish the admin fee. Most other brand name restaurant chains followed, culminating in a climbdown by Pizza Express.

    So because of that campaign, thousands of waiters got an increase in their income by 8% to 10% of the tips!

    However, despite this victory it is still possible for employers to dip into your tips if they come from a credit card or service charge on the menu.

    Here’s why.

    There was quite a high profile case on this against the Paradiso & Inferno Restaurant in Strand and it ended up in the European Court of Human Rights. The decision in that case had a huge impact because what they said was, ‘if the customer leaves a tip on the credit card or pays a service charge on the menu, that money belongs to the employer. It’s only once the employer decides it will allocate some or all of that money to the staff, that it creates an obligation to pass that money on.’ Even then they can change the amount by making clear from the outset that it is non-contractual.

    They do this by establishing what is called a Tronc scheme governed by what is known as the HMRC E24 Guidance. This says that if the Tronc is genuinely independent neither the employer or the employee pay National Insurance on tips or service charge paid into your wages. When employers were charging an admin fee it essentially meant that the bulk of both workers and employers saving was going back into the company pocket.

    Now that many employers have abandoned admin fees it may seem like a good idea not to pay National Insurance on your tips and service charge – but doing that can have an impact on pensions, holiday pay, redundancy and other elements based on a weeks pay.

    Also it is not always guaranteed that your Tronc will be genuinely independent from your employers influence, especially if they have appointed an external consultant paid by them to run the Tronc.

    For this reason Unite has reached an agreement with the ALMR (the main employers association representing restaurant and pub chains) to establish a code and set of rules to ensure genuine
    Independence, Transparency, Engagement and Allocation.

    If you have concerns about how the Tronc is being run in your workplace please contact
    dave.turnbull@unitetheunion.org

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