Luxury department store Harrods has agreed to let staff keep 100% of the money raised from restaurant tips following a union campaign.
The store was targeted by protesters earlier this month after it emerged that the retailer, which is owned by Qatar’s sovereign wealth fund, kept 50% of the discretionary 12.5% service charge automatically added to diners’ bills. The retailer has also announced that it is reducing its service charge rate to 10% to give customers more discretion over the amount they wish to contribute.
The campaign, first reported by the Guardian at the beginning of January, was organised by the United Voices of the World (UVW) union, which argued the Knightsbridge retailer was shortchanging more than 450 kitchen and waiting staff who worked in its restaurants.
“We are delighted to have won this amazing victory against the richest department store in the world,” said UVW’s general secretary, Petros Elia. “The victory sends out a clear message to the rest of the restaurant and hospitality industry that workers are no longer going to accept anything less than 100% of the tips. The success of the campaign at Harrods offers a powerful model to follow for other workers across the industry.”
Earlier this month Harrods confirmed it was reviewing the way the service charge was distributed and on Friday confirmed an “improved tronc system” was being introduced that would mean 100% of the charge’s proceeds would be handed directly to staff. A tronc, from the French tronc des pauvres meaning poor box or alms box, is used to describe a central pool that automatically shares out tips and discretionary service charges.
“Over recent months, Harrods has been meeting with restaurant employees to discuss the system through which it distributes service charge,” said a Harrods spokeswoman. “This has been in order to review all aspects of the current system and ensure that the service charge is distributed fairly to all restaurant staff. Following these discussions, Harrods is announcing a new system whereby 100% of a discretionary 10% service charge will be distributed directly to staff.”
The use of “tronc” systems has proved controversial because a number of companies have used them to retain a portion of the service charge without customers or staff necessarily being aware that was the case. Harrods said the only deductions from the service charge under the new arrangement would be the “minor administration cost” of the tronc.
In December the chef Michel Roux Jr admitted that his Michelin-starred restaurant Le Gavroche classed service charge income as revenue rather than tips to be shared among staff. He has since said the restaurant would scrap the charge from the end of January.
Roux also apologised following a Guardian report in November which revealed that he had been paying some of his staff less than the minimum wage at his Mayfair restaurant, where the menu includes starters costing as much as £62.80 for lobster mousse with caviar and champagne sauce.
Fortnum & Mason, another high-end London department store, is also trying to persuade staff at its Heathrow bar to move over to a tronc system – but only if they agree to take a cut in basic pay. Fortnum & Mason does not currently distribute any of the 12.5% service charge collected on drinkers’ bills at Heathrow.
Harrods said it had also appointed a new, independent “troncmaster” who would manage the system autonomously on behalf of employees.
“As well as providing a fair arrangement for employees, Harrods wants to ensure that customers are presented with a transparent, reduced service charge, allowing them more discretion in the amount they would like to contribute,” the spokeswoman said.
“The decision aims to be in line with recent government consultation objectives on service charge, which encourage transparency for both employees and customers, while rewarding employees for the service they provide.”
