Page last updated at 17:33 GMT, Tuesday, 22 April 2008 18:33 UK

Waiters' tips laws under scrutiny

Waiters' tips are sometimes shared between staff and employers

The government is to look into laws around tips in restaurants, saying it was "not clear" if owners who kept a share were breaking the law.

Even leaving a cash tip was no guarantee the money would go to the waiter, peers were told.

Minister Baroness Vadera said tips could even count towards the minimum wage, if they were put through payroll.

The Department for Business, Enterprise and Regulatory Reform (BERR) has agreed to consider the issue, she said.

The UK's largest union, Unite, is campaigning to stop service charges being diverted into restaurants' takings, or being used to "top up" salaries to make the minimum wage.

'Dishonourable scam'

In the House of Lords earlier, Lib Dem peer Lord Lee asked what powers the government had to ensure tips went to staff, and not to restaurant owners.

He urged the government to look into the "dishonourable scam" where some employers keep tips or use them to top up the minimum wage.

This is a complicated issue but we will consider it
Baroness Vadera

Lady Vadera told peers that restaurants operated a "wide variety of practices" which the government did not regulate in detail.

Tips can count towards the minimum wage, but only when they have gone through the employer's payroll, she said.

Asked whether restaurants could be made to put their tips policy on their menus, peers were told the only rules around it were that customers be forewarned if a service charge was automatically added onto the bill.


"They do not currently have to disclose whether or not that is going to go to staff and ... that is something that needs to be considered," Lady Vadera said.

She agreed there were "issues of concern" and said BERR had agreed to consider the issue and "take all representations into account", including the British Hospitality Association and the unions.

But she warned that tighter enforcement of tips might led employers to cut wages or raise prices to compensate, which might put diners off tipping.

"This is a complicated issue but we will consider it," she said.

One independent peer, Lord Bledisloe, a QC, said managers were committing theft if they took tips intended for staff - and theft was prosecutable.

The minister replied: "It is not clear in the law because it could be that the restaurant takes the service charge as part of its revenue, then passes it on to the employee then pays NICS [National Insurance contributions] on it so the situation is unclear."

Peers were told but most restaurants run a "tronc" system, where someone holds the tips to be passed to waiting and kitchen staff.

"But that does not mean that in all cases it is illegal for this to be shared by the owners or the managers," said Lady Vadera.

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