HL Deb 12 November 1976 vol 377 cc864-5

11.12 a.m.

Lord MONSON

My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what action they plan to deal with the fraudulent practice which was recently revealed by the Automobile Association, whereby certain hotels and restaurants retain for their own benefit the "service charges" extracted from their customers, instead of passing on the proceeds to their employees.

Lord JACQUES

My Lords, a tip is normally the property of the worker who receives it, but a service charge imposed as an addition to customers' bills is the employer's property unless a worker's contract provides otherwise. The Government are not contemplating any action at present.

Lord MONSON

My Lords, I thank the noble Lord for his reply. Does he not agree that this practice defrauds both the customer, who effectively finds himself paying a higher tariff than the one he had originally bargained for, albeit in disguised form, and also the staff, who are cheated of what is their due? Is he aware that there is at least one establishment in London which specifically requests its customers not to tip, on the grounds that the service charge goes to the employees, but where, in fact, the employees receive no more than a flat hourly wage, and a very modest one at that, irrespective of the number of customers?

Lord JACQUES

My Lords, if an employer gives the impression that a service charge paid by the customers is going to the staff but it is not, in fact, going to the staff, that, in my view, is sharp practice.

Lord HAILSHAM of SAINT MARYLEBONE

My Lords, but is it not sharp practice anyhow, because although I have no reason to doubt the legal opinion which the Minister has given us, does not the ordinary customer believe when he pays the extra 10 per cent. that it is going to the staff? So if it is not going to the staff is it not sharp practice, unless the hotelier makes it perfectly clear that he is going to put it into his own pocket?

Lord JACQUES

My Lords, I wholly agree with the noble and learned Lord.