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Hospitality Today | Oct/Nov 2015


The Battle for Tips


by Susanna Gilmartin


Partner in the Employment Team and Head of the Food & Beverage sector team at Thomson Snell & Passmore


Côte Brasserie, the French bistro restaurant chain has recently come under severe criticism and scrutiny when the press exposed the company for retaining its 12.5% service charge rather than passing this to its staff. This caused national outrage with campaigners demanding the public boycott the restaurant chain and Business Secretary, Sajid Javid, announcing he would fight for employees to keep their tips and proposing to launch an investigation into the ‘abuse of tipping’.


When I read the articles on this issue and in the days that followed when more restaurant chains where exposed of adopting a similar practice, I must confess to feeling more and more outraged, but is our outrage justified? Are restaurants who adopt this practice acting outside the law?


The service charge belongs to the restaurant The service charge paid by customers belongs to the company, therefore, Côte are not compelled to share it out amongst their employees. According to government guidance published in 2009: A Code of Best Practice on Service Charge, Tips, Gratuities and Cover Charges’ restaurants should be transparent about what happens to the service charge to the public. The Code in summary states that we the customer should be told if the service charge is going to be kept by the restaurant, where our money is going and what it is being used for.


We should also be informed where the service charge is shared between the restaurant and its employees, what the percentage share is. We are supposed to be provided with this information so that we can decide whether we want to make any discretionary service charge payment.


HMRC provides clear guidelines on how employers should treat tips. A tip is an uncalled for payment offered by a customer usually paid either in cash or added to the payment on a credit/debit card.


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