Hospitality Sector: Tipping

Alex Sobel Excerpts

Wednesday 7th March 2018 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Roger. I congratulate my hon. Friend the Member for Bristol North West (Darren Jones) on securing the debate.

The hospitality sector has traditionally employed significant numbers of young people who, it is clear to me, are being taken advantage of by unscrupulous employers who use legal loopholes to maximise their profit at employees’ expense. The world of tipping is governed by custom and, as we know from visits abroad, it can differ from country to country. Even here in the UK, there is no definitive guide on when we should tip and how much we should add to the bill. In restaurants, of course, that is pretty straightforward, but what if there is already a service charge added to the bill? What about gastropubs? I do not want to come over like Alan Partridge, but it can be a little bit complicated at times.

There is one constant among all this etiquette, which is that people expect, when they give a tip to the waiter, that the waiter will get the tip exactly as it has been handed over. It should not be used as a way to subsidise employees’ pay, which is the situation we are in today. My hon. Friend eloquently set out what has been going on at Aqua Italia. I think that is a situation most customers would probably find objectionable if it were drawn to their attention. It unfairly penalises workers for events that are outside their control. They are effectively at the mercy of the customer, and of course the more the customer spends, the more they need to recover in tips.

[Alex Sobel (Leeds North West) (Lab/Co-op)]

I thank my hon. Friend for an eloquent speech. Students in my constituency got in touch with me about the practice whereby, when customers leave without paying, their tips and wages are docked for those customers. Surely businesses should be taking that on, not penalising workers who are already low paid?

[Justin Madders]

My hon. Friend is absolutely right. That practice is common in petrol stations as well, when people drive off without paying. It is not something that should be visited on the employees, some of the lowest-paid people in our country. It is not right or fair that they should be penalised for something that is entirely out of their control. There are other things the employee cannot control: what if the customer has a complaint about the food, which has been prepared by someone else, and does not leave a tip? What if they have had to wait a long time before being seated? They might be in a bad mood anyway and just not feel like giving a tip.

Those are all vagaries that can affect whether a tip is given at all, but they should not be used to undermine the lawfully agreed pay rate, potentially breaching minimum wage regulations. I accept, as my hon. Friend the Member for Bristol North West said, that it is quite difficult to reach a calculation and know whether the regulations have been breached, but it is certainly possible.

I have heard it said that some employees can end up paying more to their employer in tips than they actually earn in wages for their shift. Does that not tell us something about how this system is completely out of kilter? Conversely, if they do not receive enough tips, they can have money physically taken from them, possibly taking their pay below the minimum wage—albeit maybe not across the whole reference period, but certainly for that particular day—which could leave them out of pocket altogether.

There are other challenges like that, in the hospitality sector in particular. The practice of cancelling shifts at short notice can also lead to people being out of pocket. What kind of country do we live in if somebody can pay for their childcare and their transport to work, only to get to work to be told that they are not needed and can go straight back home again? That is not acceptable.

The blunt truth is that this and many other arrangements in some areas of the hospitality industry are just a scam. They are a device to increase profits at the expense of workers. That is part of a wider problem in that this sector and others seem to treat workers, especially young people, as a disposable commodity. This industry has always involved a fair amount of casual work, but there are companies out there that seem to predicate their business model on exploiting their staff. I believe this is part of a wider trend, which has crept into our economy over the last few years, that work is now insecure and exploitative, and it is not the cornerstone it once was to enable people to build their lives.

That culture has led to an explosion of zero-hours contracts: it says that anybody wanting to become a nurse has to pay £9,000 a year for the privilege of working on the ward and allows an employer to pay less than the minimum wage by calling a job an apprenticeship. It is a culture in which the only way to get into some roles is to take an unpaid internship, which can last for months and have no guarantee of a job at the end. It is a culture that classes more and more jobs as self-employed, thereby avoiding a range of employment rights. It is a culture in which mass redundancies are met with a shrug by those with the power to do something about it.