Have your say on tipping to help staff earn a fair income

To tip or not to tip? Picture: Stephen Mansfield

LET’S face it, tipping is a mess – and we’re not talking about dumping black bin bags into hedgerows. It’s that awful moment when you have to decide what is the value of the service you have just enjoyed.

While we all understand that many in the service sector live on overtime and tips to supplement minimum wage levels, we prefer to be able to make our own contribution based on conscience and an appraisal of our experience. Even cab drivers without any pleasantries expect a tip.

What has become distasteful is the rise of “discretionary” service charges on bills, as a kind of subversive tax. Many of us resent this charge when we know the money is not going to the servers as an extra, but as a way of paying their wages.

Scotland’s economy depends on bars, coffee shops and restaurants; there are around 20,000 business in the hospitality, leisure and service sector and tipping is the norm.

The new plans to end unfair tipping practice and allow the customer to see good service properly rewarded are to be welcomed. One option being discussed is whether a voluntary code should be set aside, with tipping placed on a statutory footing.

The UK government is consulting, with three objectives: that consumers understand this is discretionary and they have a right to have it removed from the bill; that tips go to the workers; and that we know more about an establishment’s tipping structure.

This also presents an opportunity for employment law. When young people apply for work in a coffee shop, they are often not in a strong position to question what will happen with the tips they make. Any tips received at work do not count for National Minimum Wage purposes and cannot be used to round up a worker’s salary to allow them to meet the pay levels.

This means a 27-year-old barista cannot be paid £6 an hour plus £1.20 an hour in tips. He would have to be paid £7.20 per hour and receive tips on top of this.

Failure to pay the minimum wage will leave employers exposed to action by HMRC, with penalties being enforced and the employer being named and shamed.

Workers may bring a claim at the Employment Tribunal for unlawful deduction from wages against an employer failing to pay the minimum wage, or bring a breach of contract claim in civil courts.

Then there is holiday pay. Tips paid through a payroll system should count towards a week’s pay for the purposes of calculating holiday pay, so as to not discourage workers from taking annual leave.

It is disgraceful to think that employers in the service industry are still not paying staff the minimum wage and patrons of restaurants, bars and cafes are often shocked to discover tips are used to top up hourly rates.

Of course, some large companies explain that having discretionary fees allows those behind the scenes to benefit from the service, as the person who cleans the salad and grills the chicken is as much a part of the service as the smiling face placing it on the table.

Increasingly, it will be the role of HR people to set out clearly the policy of tipping. It might be helpful if all companies put up a sign clearly explaining their policy to allow customers to make a more informed judgement.

The UK government’s consultation will secure a fairer deal for workers and provide a firmer foundation for dealing with tips and service charges. The consultation is open until 27 June and looks certain to become a topic of conversation at dinner tables over the summer months.

• Marianne McJannett is an employment lawyer with TC Young in Glasgow, a member of United Employment Lawyers, a network of 60 independent law firms.