Hi- I work as a waitress in a small restaurant, and our tips are mainly cash tips directly from customers that go into a bowl beside the till. However the owner/manager has complete control over these and sometimes doesn't divide them up fairly or give them out at all. He has printed a memo stating that we have no right to the tips and it is up for him to divide them as he sees fit. Is this legal? And if not would appreciate evidence (ie. a link to the actual relevant law) to help. Thanks!
This is a frequent question, albeit in different guises.
In this case, it would first depend if you are speaking about tips or service charge.
Tips in cash which are voluntarily given by a customer to a worker, such as a waiter, count as a gift from the customer to the worker. They therefore do not form part of the worker’s pay. Even if the cash tips are pooled by all the workers and shared out amongst them, they still remain gifts to the workers and so are not part of their pay.
If a service charge is compulsory, that is, it is added to all bills automatically, it is the property of the employer. The employer can share it out between the workers as the employer wishes. If the worker has a clause in their contract saying they are entitled to a share of the service charge, they should get this on top of their wages.
If a tip is paid by a customer voluntarily adding an extra amount to a credit card or cheque payment, the tip is the property of the employer. The employer can share it out between the workers as the employer wishes. However, if the worker is given a share of the tip, this should be paid on top of their wages.
Since July 2008, the Government agreed to change the law regarding allowing restaurant owners to use tips as part payment instead of on top of the minimum wage, but has not yet done so.
Under Units's the Fair Tips Charter, the following is recommended:
That employers pay at least the minimum wage with 100% of tips added on top as a bonus with no hidden charges
That employers reach agreement with the staff directly affected as to how tips should be shared out
That employers should make no deductions from tips or salaries to cover things such as till shortages, customer walk outs or breakages
That the rules for the distribution of tips and service charges should be made available in writing for both staff and customers upon request.
Although the government back this campaign, the charter has yet to be enshrined in law.
If you are speaking about cash tips, you should be declaring them to HMRC and paying tax on them. As a gift to you and unless your contract includes a proviso, the owner's actions regarding cash tips amounts to theft (to which you are partly acquiescing by putting your tips in a bowl in order for the owner to share out afterwards). Personally, I would briefly and very nicely explain to customers that, if they feel the service they receive deserves a tip and they want it to go to you, they should give it to you, as the owner often just keeps them. I believe very many customers would consider the owner's actions as theft. I would also join a union, take advice and ask the local rep to start a local Fair Tips campaign, in conjunction with one or more local, fair-minded restaurant owners and the media.
But it's easy for me, because I'm not the one in your position. Sorry!
(The HMRC requirement (www.hmrc.gov.uk/working/bens-shares-tips/tips-bonuses.htm) to set up a tronc to pay tax on tips paid by credit/debit card and then shared out doesn't really help you).