BHA calls for new law on tipping and service charges

Restaurants and hotels should be legally required to tell customers how service charges and tips are being distributed among staff, The British Hospitality Association (BHA) has said.

In a new initiative proposed to Business Secretary Sajid Javid, the BHA said that it wants the government to introduce legislation to make businesses reveal exactly what happens to tips and service charges.

The BHA said that it wants to end confusion among customers about who is entitled to service charges.

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 customers 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.”

The letter to the Secretary of State, Sajid Javid says: “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’s letter comes as the government looks for evidence on how cash and non-cash tips, gratuities, cover and service charges are collected and how much employers deduct from their employees.

The deadline for responses to the Department for Business, Innovation and Skills is November 10.