Over the past few weeks, the extent of sharp practice over service charges and tips in the restaurant trade has been exposed with some chains charging between eight per cent and 10 per cent fees for dividing tips up between staff. In the case of Las Iguanas, waiting staff are required to pay three per cent – 5.5 per cent of the money taken on the tables they serve to the restaurant meaning that an entire night’s tips might end up being pocketed by the restaurant chain.
In response to the habit some people still retained from previous scandals about abuse of gratuities by restaurants, the sharp practice allegedly extends, in some instances, to staff at Cote telling the Evening Standard they are told to say that they do receive all the money when they do not receive the 12.5 per cent service charge.
The inquiry announced recently by Secretary of State for Business, Innovation and Skills, Sajid Javid, into the practice – with a suggestion of restaurants being forced to cap charges – follows the campaign initiated by Unite the Union on Pizza Express earlier in the summer. Subsequent public outrage has grown as restaurant chain after restaurant chain has been exposed for deducting significant amounts from workers. It would be easy to have missed that Labour members of parliament – including Jo Stevens and Peter Kyle – called for an inquiry in to this first, it is the Tories, not Labour currently getting the credit on the issue. Over the summer the media focus on Labour has been almost exclusively on our very public internal debate and the Tories have very neatly gained the upper hand in a range of policy areas that most of us think should be Labour’s territory.
The public has been outraged more widely on this than on some other issues affecting low-paid workers because tips are much more tangible and something that customers have a stake in as they pay them directly.
This is not yet a fight that has been won for low pay workers. Announcing an inquiry is simply that: an announcement of an inquiry. It is as meaningful as its findings which are presumably some way off. An inquiry is not a solution until a solution is presented and found acceptable by the workers the issue actually affects.
Talk is cheap and the Tories are getting quite good at sounding like they are on the side of the low paid while simultaneously hitting them hard. Consumer and political pressure is still needed to follow through on this. So as a party, Labour needs to be clear and vocal about the fact that the cost of a meal should be the cost of a meal and any other payments – whether called a service charge or tip – should go to staff. As Dave Turnbull of Unite the Union has pointed out, capping what can be taken from staff legitimises deductions from what most members of the public think is a reward for good service and – particularly given how hard it appears to have been to enforce the minimum wage itself – would be difficult to police.
Equally, as consumers we need to remove our custom from companies that are behaving badly and reward those that treat their staff decently. This is the principle of the (real) living wage campaign as well.
The principle that tips should not make up the national minimum wage has been established but with low paid workers about to lose out on significant amounts of tax credits they will still remain dependent on tips from customers to get anything approaching an income they can actually get by on. Labour also needs to be clear that some (not all) employers of significant numbers of low-paid workers are likely to try to find ways to recoup some of the cash they have to pay out to make up the so called ‘National Living Wage’. Any measures put forward by the government need to prevent this.
The new code of practice suggested in the media by the government is not the answer. It would be more effective to simply establish a legal right of staff to keep tips and service charges and for restaurants to charge customers what they want to keep through the menu prices. This is an issue that needs both political and consumer action.
We need to continue the pressure on lifting low-paid workers out of poverty by ensuring that work genuinely pays, that a tip is a tip to be kept in addition to a wage and that a ‘living wage’ is enough to actually live on.
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