Code of practice for restaurant service charges published

The British Hospitality Association (BHA) has published a Code of Practice, urging restaurants to disclose to customers exactly how they deal with the discretionary service charge and non-cash tips.

The code, drawn up by the BHA after discussion with the Department for Business, says that disclosure should explain how the restaurant distributes the proceeds from the service charge to employees.

Recommendations within the Code suggest that disclosure should at least be a written note available for inspection at each restaurant or hotel restaurant and on the establishment's website if there is one.

It says that disclosure should cover whether an amount is deducted for handling costs (and how much); how the remainder is shared between the restaurant and the employee; and the broad process for distribution.

This should explain, for example, whether the amount is shared between the employees in the restaurant through a system controlled by a representative of the employees.

The BHA is urging restaurants throughout the industry to implement the code in order to make sure that customers are fully aware of how the service charge is distributed in their establishment.

"We've had too little information in the past about the way the service charge is collected, what it is for and who receives it. This has given rise to widespread criticism which has damaged the industry's reputation." says Bob Cotton, chief executive.

"The Code will ensure that restaurants make crystal clear how they distribute the proceeds of the charge, who gets it and what percentage, if any, is kept by the restaurant to cover legitimate costs."

Members of the BHA have already accepted the Code and will be implementing it in time for the introduction of new legislation, which bans the service charge being used to make up the National Minimum Wage, on 1 October this year.

"We are urging all restaurants to follow the code so that disclosure becomes universal practice"

He added that a voluntary code was the preferable option "which I've no doubt government would be keen to introduce if the code is not widely accepted by the industry."

Words: Clare Riley

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