Workers are considering legal action against a swathe of upmarket London restaurant owners including Harrods, the Savoy Grill, the Ivy and the Wolseley that add a cover charge to diners’ bills that does not go to workers.
Legislation that came into force in October requires business owners to hand over all tips and service charges to staff. However, a number of restaurants add a mandatory cover charge as well as a service charge and only pass on the latter to workers.
Workers at Harrods said they would write to the conciliation service Acas as a first step towards an employment tribunal case backed by the United Voices of the World (UVW) union over the handling of the £1 cover charge levied in its restaurants. Some staff went on strike this weekend in a dispute over pay and conditions that included the levy.
Alice Howick, a member of Harrods waiting staff and a UVW member, said: “We are arguing that the cover charge is a kind of service charge in that it is an extra amount added to the customer’s bill before it is presented to the customer. At the moment, all the revenue made from the cover charge is going directly to the company, but we believe it should be going to the employees.
“We have serious concerns that our service charge, which makes up a considerable portion of our income, will be affected in the long term.”
Bryan Simpson, the lead organiser for the hospitality sector at the Unite union, said it was also considering legal action against businesses levying a cover charge that they did not pass on to workers.
He said the union was working with the Department for Business and Trade to close any potential loopholes as part of consultation on the new employment rights bill.
“Unite is quite clear that cover charges are tips for the purposes of the Employment (Allocation of Tips) Act and that any attempts made by employers to hoodwink customers by simply renaming what is ostensibly a service charge would be immoral if not illegal,” Simpson said.
“Following multiple reports from Unite members in fine dining that some of the most prestigious brands in the country are using ‘cover charges’ to divert money intended for workers towards improving their own profit margins, we are currently considering legal action against the companies involved.”
The Wolseley on London’s Piccadilly levies a £2.50 cover charge on top of the 15% service charge it adds to bills, which are already at the pricier end of the spectrum with french onion soup at £10.50 and fishcakes for £27.50. As a result, a bowl of soup could now cost £15.57.
The Wolseley’s sister restaurant on Aldwych, the Delaunay, asks for a £2 cover charge on top of a 15% service charge. The company says both restaurants have levied a cover charge since they opened. The fee at the Wolseley has increased by 50p since 2022.
The hospitality entrepreneur Richard Caring’s empire adds a £2-a-person levy on top of chunky service charges at his London flagship Ivy restaurant in West Street, Soho, as well as at Sexy Fish, Scott’s, J Sheekey and Bacchanalia. The restaurants said the charges had not been introduced recently.
The Savoy Grill, another well-established restaurant, run by Gordon Ramsay, also adds a £2-per-person cover charge on top of the 15% “gratuity”. It said a cover charge had been in place since it opened.
The law changed in October so that all tips and service charges must now be passed on to the staff who earned them, rather than being retained by employers. The legislation says this applies to all tips, gratuities and service charges paid by customers, however they are described.
Any employer who breaches the legislation could be ordered to pay compensation of up to £5,000 per person for financial loss. Workers who believe they are not being treated fairly must first consult with Acas and may have to head to a tribunal to secure a decision.
