AUTHOR: Peter Davies, Co-Founder of FairTipShare and Managing Director of WMT Troncmaster Services
It won’t have escaped anyone’s notice that, over the last few years, there has been a steady flow of media claims accusing hospitality businesses of failing to deal with tips and service charges in a manner which is fair, ethical and transparent. Some are alleged to have simply kept such payments for themselves despite the intention that the money should be given to the team who have delivered customer experience.
The overwhelming majority of hospitality businesses have always operated in a way which most would consider fair. Complications occur due to laws around legal ownership, taxation and who should get what. As a result, many businesses have decided that it is better to say nothing unless prompted.
Whilst understandable, this has allowed the view to take hold with the dining public that there is something dubious or underhand about the whole affair – a view that some outside the industry who want more radical change, have jumped on.
Last year I was asked by a number of leading operators to put together a statement of what “good practice” looks like. As everybody deals with things slightly differently, any such statement was always going to be about principles and standards rather than a “one size fits all” solution. After distilling “good practice” into a set of key principles, the next question was what to do with it?
Market research carried out by WMT together with EP Business in Hospitality showed that customers wanted information that would allow them to make an informed decision about whether to tip or pay service. Those businesses dealing with tips in a fair way felt that they needed a simple and clear way of communicating this – and so the idea of a kitemark was born.
Members will be able to display the FairTipShare logo telling consumers that their policies and procedures have been independently vetted to ensure they comply with the scheme’s standards with additional detail and information available online. As well as reassuring customers, being a kitemark member will also indicate to staff – both current and potential – that a business treats its staff fairly and should be “an employer of choice”. See below for the 11 key principles on which the scheme is built.
More information is available at fairtipshare.co.uk. Businesses are able to register their interest from 1st October 2019 with the scheme going live later this year.
The FairTipShare Principles
- Any tips or service charges paid by customers should be managed and processed in a way that is fair and transparent.
- Any service charge which the customer is invited to pay is always discretionary and should be clearly advertised as such.
- If customers are invited to pay for service, the business should operate a fair and well-managed tronc system.
- Customers expect service charges to be paid to staff in addition to salaries or basic pay, not as part of contractual agreements or obligations.
- The tronc system should seek to reward and benefit all members of staff who contribute to the customer experience and who deliver the service to consumers.
- Businesses should generally not get involved in cash tipping unless this is required by legislation or staff wish this to take place. Whatever cash staff receive directly from customers belongs to them.
- Businesses should ensure that staff are aware of their legal obligations to record and declare any cash tips to HMRC.
- The costs of collecting, processing, administering and distributing tips and service charge to staff (collectively known as administration costs), generally these do not exceed 5% of the tips and service charge collected. With the exception of these costs, businesses should make 100% of the funds available to the tronc system to allocate to the members.
- Customers and staff should be clearly advised of whether a tronc system exists, who manages it (a member of staff or an independent third party), and which groups of staff receive a share.
- Staff should be made aware of the rules of the tronc scheme, how their own share is calculated (e.g. points, minimum rates, equal share), the identity of the Troncmaster, and how to raise or ask questions regarding the operation of their scheme.
- The Troncmaster should manage the tronc scheme fairly and free of bias, favouritism, personal friendships or self-interest and should not unfairly exclude certain individuals or groups of staff.
