asked Her Majesty’s Government:
What powers they and their agencies have to ensure that customer gratuities are received by staff rather than being retained in some form by restaurants.
My Lords, restaurants, like any other business, operate a wide variety of practices in relation to tips. The Government do not regulate them in detail, with one exception: every employer must pay their workers the national minimum wage. Tips may count towards the minimum wage only when they have been paid through the employer’s payroll.
My Lords, I am grateful to the Minister for her reply. Is it not clear that a minority of restaurants operate a dishonourable scam by retaining some of the gratuities or tips themselves or, in other cases, actually using the gratuities or tips to top up to the minimum wage? Will the Minister work with the British Hospitality Association to look at this whole question, which is clearly unsatisfactory at present? The association represents 18,000 restaurants. Would it not make sense if restaurants had to display on menus or bills what their policy is with regard to the distribution of gratuities or tips?
My Lords, as the Secretary of State said yesterday, this issue is of concern not only with respect to employees’ rights but with respect to the rights of consumers to know where their tips are going. The DBERR has therefore undertaken to consider the issue and take all representations into account. We will talk to the BHA as well as other stakeholders, including the unions and employers.
I should simply caution that this is quite a complex matter. Tipping does not automatically lead to improved employee wages. In tight labour market conditions, the money does not need to be passed on, because wages can be reduced over time or consumers may stop paying the tips if the employers’ costs go up. It is a complicated issue, but we will consider it.
My Lords, is it not the situation in law that when these gratuities are received by the management they are held in trust, either for the individual waiter or waitress or for the staff as a whole, in accordance with any agreement made?
My Lords, unfortunately, the law is not clear on that matter, which is why we have said that we will take all representations and consider it. Most restaurants are run on a troncing system in which a troncmaster holds the tips, usually for all the staff both in the front and the back. However, that does not mean that in all cases it is illegal for the tips to be shared by the owners or managers.
My Lords, does the Minister accept that, although certain aspects of the law may be unclear, following the very successful campaign by Unite to draw attention to this issue, if you go into a restaurant and it says on the bottom of your bill, “voluntary contribution to service”, and if your voluntary contribution is in fact a contribution to the minimum wage salary of the member of staff, that is clearly a breach of contract? Is that not something that trading standards officers should be addressing and stopping?
My Lords, the only regulation that actually applies to the disclosure of the service requirement is that customers are required to be told in advance that there will be a service charge if it is going to be automatically added on to the Bill. Restaurants do not currently have to disclose whether that is going to go to staff—and, in response to the Question asked by the noble Lord, Lord Lee, that is obviously something that needs to be considered.
My Lords, I declare an interest as a member of the Unite trade union. Given that Her Majesty’s Revenue and Customs takes into account a notional amount of money earned by way of tips by staff in restaurants and hotels, would the Minister agree that perhaps the best thing is to follow my personal practice, which is always to leave the tip in cash on the table?
My Lords, naturally, I urge noble Lords to be generous in their tipping, but it must be said that it is not the case that every time you leave a tip in cash it automatically passes through to the waiters, because there could be a contractual arrangement that requires it to be passed back either directly to the employers or on through a troncing system. The Low Pay Commission has found a large variety of practices and it is not possible to say that one method is preferable to another.
Cross Bench!
My Lords, we have not actually heard from the Conservative Benches.
My Lords, may I suggest to the noble Lord and the noble Baroness in her suggestion about leaving cash that there is an even simpler method of solving this problem? Noble Lords will probably remember that the French word for tip is pourboire. If noble Lords are worried about this matter, I suggest that they buy the waiter a large glass of red wine and leave that instead of money. The proprietor would get the message very quickly.
My Lords, I am not sure that the waiter’s family would entirely appreciate that if it is relying on the tips.
My Lords, we have already heard twice from the Liberal Democrat Benches and once from the Cross Benches, but if both noble Lords are reasonably speedy, both will get in.
My Lords, will the Minister assure us that all the tips given in this House go to the staff?
I am sorry, my Lords, but I do not know. I shall look to one of my colleagues and get the answer.
My Lords, is it not plain that, if I leave money which is plainly intended as a tip and not as a payment to the restaurant and the restaurant takes it to itself, that is not just a breach of its contract with its waiters but is theft of the money and is prosecutable?
My Lords, I completely appreciate the noble Viscount's view. However, the situation is not clear in law because the restaurant could take the service charge as part of its revenue, pass it on to the employee and pay NICs on it. In response to the earlier question, I understand that the answer is yes.