Prime minister challenged on tips system in restaurants
24 November 2010
The Unite campaign for ‘fair tips’ for hospitality workers
reached the prime minister today (Wednesday 24 November) as he was
challenged at prime ministers questions (PMQs) to hold a review of
the working of the law on tips and the voluntary code of practice
on tips set up by the last government.
Michael Connarty, MP for Linlithgow and East Falkirk, who
campaigned with Unite to stop tips being used to pay the minimum
wage, called on David Cameron to think again on his government’s
plans to abandon the 12 month review of the tips code of
practice.
Following his question in this week’s PMQs Michael Connarty said:
“There was a cross party consensus to change the minimum wage
regulations to ensure customers’ tips went to staff in the
hospitality industry on top of at least the minimum wage.
“It is now clear that some large chains of restaurants and
hotels are saying they have a ‘TRONC or Kitty’ system to avoid
paying National Insurance, and are also ripping off between 8 per
cent and 17 per cent of their employees’ tips in the process.
“Good employers are being shamed by the rip-off employers who
still think hard working staff are there to be cheated of
customers’ tips.”
Dave Turnbull, Unite officer, said: “Workers expected their
employers to hear the demands of consumers last year to pass all
the money they intended for staff to them, instead many businesses
have chosen to continue business as usual and profit from the
gratuity charges. The government must now act to implement the
review of the tips’ code that was committed to in order to hold
this industry to account, it has been a total failure.
"Of major concern to Unite members working as waiting staff is the
number of well known high street brand name restaurant chains who
seem to be manipulating inland revenue rules to their own benefit
while effectively retaining control over the distribution of staff
tips. Many of these chains add insult to injury by charging a levy
against staff and customers to cover the alleged costs of
administering tips through the payroll.
"For the government to refuse to honour the commitment to a 12
month review of the voluntary tips’ code of practice could mean
that issues such as this remain unaddressed.”
The concerns about the abuses of the TRONC systems are:
- Inland Revenue guidance (E24) states that where the
distribution of tips is controlled independently by staff national
insurance contributions (11 per cent for staff and 12.8 per cent
for employers) are not payable on tips subsequently administered
through the payroll. However, Unite believes many of the schemes
registered for this purpose are not truly independent of the
employer.
- A number of restaurant chains are charging staff between 8
per cent and 14 per cent of their weekly tip income as an admin fee
for so called “legitimate business costs” yet chains of a similar
size to these manage to administer tips at no charge at all to
staff. Very few chains are being open about this in line with the
provision’s voluntary code of practice.
ENDS
For more information contact Saba Mozakka, Unite press officer, on
07768 693 953.
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