Whilst many in the industry have welcomed the new tips legislation as a needed levelling of the playing field for all, the truth for many is that the timing could not really be worse. 

Not only following some of the most challenging years in living memory (I won’t list what we’ve faced these past years because it’s frankly just too depressing) but now the 1st July deadline comes in the wake of the largest increase in minimum wage most of us can remember. Justifiable in the context of a cost-of-living crisis and lingering high inflation, but very, very hard to accommodate for already stretched hospitality businesses. 

Hospitality businesses have always been hard to run.  Margins are tight, competition is intense and the rate of failure has never been higher. 

So it shouldn’t surprise us that although most businesses publicly claim the service charges and tips they collect go to staff, the truth is most have been forced to adopt a policy of retaining some amount of tips and service charges historically.  The intention being to cover the substantial costs of getting this money to staff in a way that is “fair” (whatever that means in each circumstance) and recouping what they view as other legitimate costs for staff benefits. 

Regrettably, over time, some pushed this further than the government could tolerate.  Hence we’re now faced with a requirement that every penny of these funds is paid to staff, within a narrow time frame, and only to those staff (usually) who work in the place they were collected as their normal job. 

Those that retained some portion of the funds to cover costs now face a hole in the P&L. Others who took the view that head office or non-site staff should get a share too (after all they unquestionably contribute, so why shouldn’t they?) now face the government simply disagreeing with this practice, and big shortfall in head office salary budgets. 

I’ve probably heard every story around treatment of tips and service charges.  From 90% retained by the business (justified because it allows them to pay fair wages) through to head office team members whose salaries were up to 80% comprised of tronc (because they impact all the customers’ experience).   

But has the time has come for all of us to let go of judgement about any of this?  The “naming and shaming” and the blaming breaks my heart – because there is almost always a real, valid, struggling business at the centre fighting to grow, to thrive and trying their best to look after their people,  customers and investors.  Equally on the other side, the virtue-signalling and heckling of others just doesn’t help. 

So let’s stop, and instead can we put the energy into working out together how we get to where we now need to be? 

 Over the past few months we’ve seen the whole sector go through what feels like a classic change process.  First denial – disbelief that the government would possibly stick to such a seismic change.  Then anger and resistance, with real rage that even the card processing fee (money which we don’t even get) can be clawed back from the service charges or tips collected.