Restaurants should give tips to staff, a government minister has declared after wading into the Côte row.
The leading restaurant chain pockets the entire service charge paid by customers, rather than giving it to the staff as tips, it has emerged.
The 12.5 per cent charge is automatically added to bills but goes straight to the company.
Staff are even instructed to say the charge goes to workers if asked about it by customers.
But Business Secretary Sajid Javid said he did not believe the system was fair and revealed that government would be examining the issue.
“While it would not be appropriate to comment on this individual case, as far as I’m concerned, tips belong to the staff,” he said.
“Tips” and “service charge” are two different legal things.
Tips are voluntary payments from the customers and as such are the legal property of the staff and no one else. They are subject to income tax but not NI and VAT.
A service charge is a charge by the business. It belongs to the business. It pays, when distributed to staff (if it is) both NIs and income tax. VAT is charged upon it.
“A recommended service charge is added to your bill” is a bit of a grey area. Back when, if the customer could ask to have it taken off, and it wsa with not problems or pressure, then it’s a tip not a service charge.
But Javid should know this stuff. Tips do belong to staff and it’s theft to take them from them. Service charges do not.