Hospitality Sector: Tipping

Debate between Catherine West and Laura Pidcock

Wednesday 7th March 2018 Westminster Hall

[Laura Pidcock]

That is absolutely right. My hon. Friend gives a terrible but, I am sure, quite common example of what is happening in the hospitality sector. I implore everyone in that sector—and in all sectors, of course—to join a trade union, because only through a trade union can they have greater workplace rights. Also, consumers will become more aware and ask questions about what is happening to the tips when they are in an establishment.

What happened at Aqua Italia has been very well set out. Most striking was the case of the woman who had to go to a cashpoint at the end of her shift. How draconian is that? What century are we in when somebody has to pay just to be at work? Of course, the mantra of this Government is that for people to get themselves out of poverty, they must be in work. That is clearly a story to the contrary.

It is astonishing that this practice is legal, and it is more commonplace than people imagine. Although it remains within the law to treat people in such an extraordinarily exploitative way, it certainly cannot be said to be moral. The problem in the hospitality sector was and is the chronic lack of regulation, which has meant that exploitation—especially of young people, who perhaps are unaware of their rights and of the benefits of being in a trade union—has been allowed to flourish. That shows that we cannot rely simply on self-regulation in that sector.

Trade unions have taken a special interest in the sharp practices used in the hospitality sector since at least 2008. In May 2015, after it emerged that restaurants such as Pizza Express, Bill’s and Strada were taking tips and service charge payments intended for staff, Unite the union launched a summer campaign against these practices. For example, Pizza Express claimed an 8% so-called “admin fee” from any tips paid on a card. That is a huge problem, which has been repeated. There was public outcry as the endemic nature of the problem was displayed and publicised via social media. The huge public reaction forced the Government to act. They launched this call for evidence into tipping practices, followed by this consultation. However, as has been repeated consistently: nearly two years on from the consultation, what action has been taken?

In June, Unite campaigners handed a 6,500-signature petition to the Business Secretary, urging him to release the Government report into tips, but it still has not been published. The petition called on the Business Secretary to give staff 100% of their tips with complete control over how they are shared, to ban the bogus tronc schemes and make the code of best practice mandatory. For every single day that goes by, more abuses come to light. The so-called “pay to work” schemes are part of this broader set of practices, which cynically exploit restaurant workers and customers, who are none the wiser.

[Catherine West]

Whereas previously a waiting job was done for a few months or in the summer while someone was a student, these days, with the flat economy we are seeing, people are working in the waiting sector for several years as a full-time role. Does my hon. Friend agree that we now have to get to grips with the situation, get some energy into this and really address the poor practices?

[Laura Pidcock]

My hon. Friend is absolutely right. For many people this is not a stop-gap, but a career—they will work for many years in a restaurant, bar or pub.

Workers are charged fees, denied service charge payments, robbed of customers’ tips and denied tips by these bogus tronc schemes. A properly run tronc scheme— a pooling system, used by employers to distribute non-cash tips for employees—should be genuinely independent, free from employer interference and involve staff, but many are not. Too many say that they get absolutely no say in how the non-cash tips and service charges are shared out, or who gets a share. We have to remind ourselves all the time that it is not the business of the employer to say what happens to those tips. Those tips are hard-earned by the service of that member of staff.

Unite has also uncovered something very important. A number of these bogus tronc schemes, organised through troncmaster consultants—quite a dramatic name—have been used by companies to minimise the basic income of workers in order to avoid liabilities on national insurance and pensions. One case of this was an advert for a sous chef with a salary of £28,000. Once taken on, the employee found out that their contract stated a salary of £16,000, with the remaining £12,000 being paid from service charges. If anybody thinks that these practices are tailing off, I should say that two weeks ago we heard about the scandal at TGI Fridays, the American chain, following the proposal to redistribute card tips from waiters to kitchen staff, in lieu of an increase in wages.

Bogus tronc schemes are among a handful of ways in which tips are taken from the pockets of waiting staff and redistributed upwards and outwards into the pockets of companies, both big and small. Trade unions are rightly pointing out that these schemes verge on remuneration avoidance, illicitly reducing companies’ tax liabilities, and therefore should be subject to an investigation by HMRC.

Until staff are given 100% ownership rights over their hard-earned tips, with complete control over how they are shared out, bad employers will continue to take the tips of staff—that has been proved conclusively throughout our history—and young people will continue to live with that insecurity of low pay and not have the regularity of their tips. As the unions have been urging the Government for a decade now, it is time that the Government showed some leadership and dealt with these appalling, exploitative practices that exploit both the customer and the employee. Let us be honest: tips are often a lifeline for staff, but they often become a subsidy for low pay. People are dependent on these tips to live, not just for luxuries.

I am becoming somewhat tired of the Government’s inaction, already mentioned by hon. Members, in response to the low-pay economy. We do not need another review, consultation or any further consideration, but we do need a legislative imperative on employers to stop this theft from their staff. Actually, a whole new suite of workers’ rights is needed, placing collective bargaining, as has rightly been said, at the heart and centre of that agenda. The Taylor review and the Government response to it did not go far enough at all. In fact, the Government’s response to some of these complex issues in the modern labour market was extremely weak. I look forward to the Minister announcing that he will indeed take decisive action on this issue.