hospitalitytoday.com | 25 Is leaving a cash tip better?
The British Hospitality Association guidelines suggest that if a cash tip is given to staff in restaurants, they should be allowed to keep it. This is only a recommendation and restaurants can legally ask their staff to hand over tips.
The bottom line is that people want to know where their money is going and clearly the public outrage over this issue shows we feel betrayed if we leave a tip for our waiter or waitress and later find out that they are not receiving it.
If customers give cash tips directly to employees or leave them on the table and individual employees keep them without any involvement from the employer, then PAYE does not apply. It is the responsibility of the individual employee in those circumstances to advise HMRC of the amounts of money received.
There is nothing to state that an employer is obliged to pay staff tips or distribute service charges. So unless there is a contractual entitlement within an employee’s contracts of employment which permits him or her to share in tips/service charge then there is no legal argument that staff could enforce for unlawful deductions.
HMRC will only accept that a payment is a voluntary service charge if it is clearly presented to the customer as an entirely optional payment.
There is also clear guidance from HMRC that tips, gratuities and service charges should not be taken into consideration when calculating the National Minimum Wage. Cote could not therefore use tips left by customers for this purpose to support paying staff wages.
Going forward the government which has been influenced by the general public feeling on this issue will now investigate the matter with the potential to legislate on this issue. Iain Wright MP, chairman of the Business Select Committee has also announced he will raise the issue with the Committee and has stated he aims to “expose negative business practises”.
Transparency and common sense are needed I am not sure that we want or need to have this issue legislated over. Transparency and common sense is what is needed – restaurants simply should be more open about their policies and inform your customers what happens to the service charge to avoid criticism. We the customer should be left to chose whether we want to recognise good service or not.
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