The BHA’s letter to Sajid David:
“…we propose that the following disclosures be made compulsory: Restaurants should disclose to customers how they deal with discretionary service charge and non-cash tips, at least by a written notice available for inspection at each restaurant and on the restaurant’s website, if there is one.
The disclosure should cover:
- Whether an amount is deducted for handling costs (and how much);
- How the remainder is shared between the restaurant and the employees;
- The broad process for distribution, for example, that they are shared between the employees in the restaurant through a system controlled by a representative of the employees.”
The BHA urged the government to introduce legislation to make pubs, restaurants and hotels reveal exactly what happens to any extra charges paid by customers in a letter to Business Secretary Sajid David.
It said it wanted to end customer confusion over who is entitled to service charges.
Transparency
Ufi Ibrahim, chief executive of the BHA, said: “For us it’s all about transparency. Although restaurants are legally entitled to deduct administration costs from service charges, for example, we think it’s important the customer understands exactly how much is deducted and why.
“Customers should be able to reward good service and know where their money ends up and how much of it goes to the staff,” she added.
Inquiry
The government recently launched an inquiry into the issue after concerns were raised by various media outlets that tips and service charges were not being fairly distributed amongst staff at several food chains.
Doubts have also raised over the ethics and reliability of 'Tronc' systems, which collect service charges and distribute them equally amongst waiters, FOH and kitchen staff.
Multiple food businesses have signed up to a voluntary code of transparency on the issue put forward by the BHA already.
The Department for Business, Innovation and Skills recently called for information about how cash and non-cash tips, cover and service charges are collected and exactly how much employers deduct from their staff.