Restaurants: Service Charge

Earl of Courtown Excerpts

Monday 30th November 2015 Lords Chamber

[Lord Rennard]

To ask Her Majesty’s Government what plans they have to ensure that customers of restaurant chains are made properly aware of the company’s policy in relation to service charges and tipping.

[The Earl of Courtown (Con)]

My Lords, we are currently assessing evidence gathered from our investigation into tipping practices. We will consider all the evidence and proposals put to us, including those to improve transparency, for the treatment of tips. We will propose any further action to ensure fair and transparent practice in relation to tips, gratuities, cover and service charges in due course.

[Lord Rennard (LD)]

This Christmas, many restaurant customers may decide to be particularly generous to those who serve them well, and I hope that they will. However, does the Minister accept that many of these customers will be unaware that service charges paid by credit cards are the legal property of the employer, that the staff providing the service may not receive any of this money and that some restaurant chains deduct a proportion of it to pay other business costs? It is clear that voluntary guidelines on making restaurant policies in relation to tipping and service charges properly known to customers are not working. Now that the Government have gathered evidence on the issue, will they look at measures to ensure that these charges and companies’ policies are prominently displayed in menus and on bills?

[The Earl of Courtown]

The noble Lord is quite right that some of these tipping practices are not as they should be. The code of practice brought in in 2008 listed a number of areas where tipping practices should be adhered to, such as making sure that all members of staff and all customers are aware of those practices. We will be looking at all the issues raised in the consultation, which finished on 10 November, and in time we will come to a decision on what we should do.

[Lord Palmer (CB)]

My Lords, does the noble Earl not agree that, particularly bearing in mind the advent of the national living wage, tipping and service charges are completely outdated in 2015?

[The Earl of Courtown]

My Lords, as the noble Lord knows only too well, if one has a pleasing experience at any restaurant, whether in your Lordships’ House or elsewhere, it is only fair to tip at the right time.

[Lord Stevenson of Balmacara (Lab)]

My Lords, the issue is really one of fairness in overall pay rather than just in tipping. Can the Minister explain how to protect the requirement that everyone in the country benefits from a living wage without dilution from other factors, in particular tipping?

[The Earl of Courtown]

My Lords, sticking initially to the national minimum wage, when the Labour Government brought in the voluntary code of practice in 2008-09, they made it clear that tips and gratuities should not be used to uprate wages to meet the national minimum wage. The living wage will be coming in this year and will help many of the lower paid.

[Baroness Burt of Solihull (LD)]

My Lords, the Autumn Statement last week referred to lower productivity in the UK than in other countries. I imagine that one’s desire to work hard may be diminished by the knowledge that one’s employer is hanging on to one’s tips. I think that the voluntary code introduced in the other place clearly is not working. Would the Minister please ensure that, following the evidence review, steps are taken to ensure that employers who hold on to tips are named and shamed?

[The Earl of Courtown]

My Lords, this was drawn to the attention of my right honourable friend the Secretary of State in the other place. We will look at all the issues when it comes to the report being made.

[Lord Cormack (Con)]

My Lords, what has all this got to do with us?

[The Earl of Courtown]

My Lords, the fact is that we all go out and eat in various restaurants and, to those who serve us well, we want to express our gratitude.

[Lord Storey (LD)]

Can we be assured that when your Lordships give gratuities in this House, the gratuities go to the members of staff in full?

[The Earl of Courtown]

My Lords, somebody behind me whispered, “And be generous”. The noble Lord is quite right. However, I know only too well that the noble Lord the Chairman of Committees actually enjoys coming to the Dispatch Box, so I suggest, if I may, that the noble Lord pose the question to him.

[Baroness Hussein-Ece (LD)]

Is the Minister aware that in some instances staff rely on those tips for topping up their very low salaries? I have also come across occasions in some restaurants where staff receive tips and nothing else. Are any measures in place to monitor this kind of disgraceful behaviour?

[The Earl of Courtown]

The noble Baroness of course will be aware that everybody must be paid the national minimum wage.