A new law is intended to stop restaurant bosses pocketing staff tips. But as Jamie Elliott reports, there may be no change

A change to the law intended to stop restaurants using tips to make up staff's pay to the minimum wage will do nothing to stop employers pocketing all of the tips diners leave.

Last
month the government announced the change to minimum wage regulations,
which will come into force in October. It said the measures would close
a loophole in the law that allows restaurants to make up staff pay to
the minimum wage of £5.73 per hour through tips, and would "give
thousands of workers fair wages … and boost consumer confidence in
the use of tips".

Responding to the news, consumer group
Consumer Focus said that from October, "customers can be confident
their tips will always go to waiting staff."

But, under the new
rules, employers will still be allowed to keep all of the service
charge and will not be obliged to display their policy on tips.
Companies will also continue to be free to use income from tips to pay
for wages and other business costs.

Since the planned changes
were first mooted, Britain's biggest restaurant chains show no sign of
heeding calls for a change in practices – and some clamp-down hard on
staff who reveal tipping policies to customers.

"The new rules
mean a restaurant will still be able to keep a proportion, or all, of
the service charge from October," says Miles Quest of the British
Hospitality Association. "But instead of saying staff receive an hourly
rate below the minimum wage, topped up to the legal minimum by
gratuities, staff contracts will have to state that employees are paid
an hourly rate at least equal to the minimum wage."

Topping up pay

Waiters
working for high-street chain Carluccio's, for instance, receive £3.75
per hour, plus three-quarters of tips left by customers on debit or
credit cards to top their pay up to the minimum wage. Waiters Cash
spoke to said that when this combination of basic pay plus tips leaves
staff with less than the minimum wage, Carluccio's adds an extra top-up.

Under
the new rules, Carluccio's waiters will continue to be entitled to the
minimum wage, but this will have to be paid regardless of tips.
However, the company will then be under no obligation to pass on any
gratuities.

Carluccio's declined to say how it would alter its
policy after October, but a spokesperson said: "All cash tips go direct
to the waiter. Credit card tips are split with 75% going directly to
the waiter and the remaining 25% shared between back-of-house staff but
not management. Waiters and waitresses receive varying hourly rates
plus their credit card tips, through the payroll. This totals an
average of £8 per hour. In the unlikely event anyone falls below
minimum wage the company simply tops up."

No change

Last
month Tragus, which owns 270 restaurants including the Cafe Rouge,
Bella Italia and Strada chains, sent a memo to managers telling them to
print weekly reports to check the amounts of service charge individuals
were collecting to ensure they were not pocketing any of it.

"If
you find certain employees have low service charge, you must organise a
meeting with the employee to discuss the reports. This may indicate
they are fraudulently having the service removed when it was actually
paid for by the customer," the memo said.

The manager who passed
the memo to Cash told us: "When staff join we tell them not to say to
customers that they don't get the service charge, but to say, instead,
that it is distributed amongst staff. If a waiter consistently tells
customers what happens to the service charge they will be disciplined
and eventually sacked."

He added that the service charge heavily
subsidises staff wages – of the £6.50 per hour staff in his restaurant
receive, only £2.50 comes from the company, with the rest paid for by
gratuities left on debit and credit card. Cash tips go directly to
staff. "A medium-size Strada restaurant would take around £2,000 a week
in service charges – all our business models are based on collecting
this income," he said.

If his restaurant has an exceptionally
busy week, staff may receive an extra 50p per hour on top of their
basic pay for those seven days – £3.50 for a seven hour shift – but
this has happened only three times in the past three months.

"It's
very hard to motivate staff to work hard and provide good service when
this often makes no difference to their weekly pay," the manager told
us.

A spokeswoman for Tragus said: "At all of our restaurants we
are happy for our customers to pay with either cash or a credit card as
best suits them.

Concerning the recent communication to our
restaurants about service charge, this relates to the tightening of
controls around cash processing to ensure that the company protects
itself against potential frauds.

"Tragus fully complies with
the current law concerning national minimum wage and tips, and will
ensure it complies with the amended legislation when it comes into
effect in October."

Small restaurants

When
Cash visited four Bangladeshi restaurants in Brick Lane, east London,
waiters told us that all tips – those left on cards and in cash – were
kept by the management and that the practice was widespread amongst
Brick Lane restaurants. "I feel bad about it, but the owners make the
rules," one waiter told us.

In London's Chinatown, however,
waiters in six of nine restaurants Cash visited said they did receive
all tips on top of their basic pay – in two restaurants staff told us
50% of gratuities went to them, while in only one did they report that
no tips were passed on.

Waiters in four restaurants in the Shoreditch area of London also said they received 100% of tips.

The
government plans to introduce a voluntary "code of practice on
transparency" later this year which it hopes will encourage restaurants
to display their tipping policies. However, Derek Simpson, joint
general secretary of Unite, the trade union campaigning for change in
this area, doubts the code will work.

"There remains an urgent
need for a fully transparent tipping system where 100% of tips go to
staff," he says. "Unite is unconvinced that the voluntary code of
practice will give consumers the clarity they need to be confident that
any money they leave will go to the hospitality employees who deserve
it. Our experience of the industry does not inspire confidence in its
ability to self-regulate on tips and services charges."

Liberal
Democrat business spokesman John Thurso agrees. "This legislation has
been all fanfare and no detail and will not have the effect it was
intended to have," he says. "The law should be changed to make sure
waiters receive the minimum wage plus any service charge left by
customers."

What can you do?

Approximately a fifth of the
UK's 30,000 restaurants do not pass on tips to waiters, according to
the British Hospitality Association, despite a YouGov survey of 2,187
adults in January which showed that 94% of customers wanted gratuities
to go to staff. 79% thought tipping policies should be clearly
displayed.

To give waiters and waitresses the best deal you should:

• Pay all tips (including any service charge added to your bill) in cash

• Ask if all tips are paid to staff on top of the minimum wage

• If you are unhappy, do not pay the service charge – it is usually optional

• Avoid restaurants that do not pass on tips to staff

• Go to fairtips.org to see which restaurants have signed up to the Unite union's fair tips charter

Word on the street: 'I had no idea … from now on, I'll put the money directly in their hand'

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