Responding to the launch of the Government’s consultation on tips earlier today, Kate Nicholls, Chief Executive ALMR, the trade body representing pubs and restaurants said:
“Tips and gratuities are an optional reward in recognition of excellent service and they do go to the highly skilled, hard working people who provide our guests with a great experience. But in many cases that service will be provided by a team, not just an individual member of staff and it is right that there is freedom and flexibility to reward all those involved, front and back of house – and that is something that our team members want to retain and customers support. Customers should be able to reward good service knowing that it will go to those that provided those services”.
The ALMR carried out a detailed survey of its 7,000 restaurant members last year as part of the Government’s call for evidence and found no evidence of abuse of the current system. Team members were actively involved in and supported the pooling and distribution of tips and no company was retaining the service charge in full or using it to subsidise low pay.
Kate Nicholls concluded:
“With the rise of cashless transactions, customers are increasingly rewarding good service through credit card payments. These have to be processed through the company payroll in order to ensure that tax is properly accounted for and paid – this is not the case with cash tips where the individual has to declare the tax and it is this which has led to some confusion and we welcome measures to increase transparency. It means that there will be a deduction, but it means that everyone receives a fair share of the tips, including the tax man.
“No company should be profiting from tips and service charges, but equally no company – particularly small businesses – should be penalised for collecting and processing tax on behalf of the Government”