A ‘Pay To Work’ System
Employment Law & HR Updates, Straight To Your Inbox
Covering topics to help you effectively manage your employees.
A chain of restaurants in Bristol has recently been forced to pay back over £850 in unlawfully deducted wages to a member of staff in what is being described as a 'pay to work' system.
The story began back in January 2018 when it was revealed that Aqua Italia - a popular restaurant in Bristol - was reclaiming money back from their employees.
An initial hearing was heard on March 6 2019, and an Employment Tribunal in London recently ordered that Aqua Italia repay the total sum of £856.54 to the claimant - Mr M Tapley.
A Violation Of The Employment Rights Act
After the hearing, Judge Baron released a declaration that said the Employment Tribunal found that Aqua Italia had breached section 24 of the Employment Rights Act 1996. In effect, this confirmed that the company had illegally deducted wages from the employee.
The Employment Rights Act was brought in for situations just like this. It helps to keep employers in line, ensuring that they don’t abuse the rights of those working for them. If this does happen - like it has here - then a Tribunal can order the employer to pay compensation to the aggrieved employee.
A ‘Pay To Work’ System
As we mentioned, this whole situation started in January 2018. A local newspaper broke the story that Aqua Italia was essentially running a ‘pay to work’ system.
All waiters were forced to pay the business 3% of all food and drink sales that they made during a shift.
So, if the waiter served guests who spent £500 over the course of an evening, the employee would have to pay £15 to the employer at the end of their shift. This money had to come out of the waiters’ tips but if they did not make enough tips to cover the charge, they would have to pay it themselves.
What happened to that 3%? Well, it was revealed that Aqua Italia used this money to pay their employees!
In effect, the waiters were earning money and then using that money to pay each other.
Instantly, this caused quite a stir and lead to calls for a change to the legality around tipping in the hospitality sector.
Resources to help your business
Free Employment Law & HR Manual
A New Law For Tipping
Fast forward back to October 2019, and it seems as though these calls may have been answered. The monumental Queen’s Speech on October 14 outlined plans to implement a law that stops employers from taking any money made by employees through tips.
This law will be called the Employment (Allocation of Tips) Bill, and it also forces employers to fairly share out any tips that are pooled together.
A Code of Practices is being implemented as well, which is designed to make the whole tipping system more transparent.
Essentially, it stops employers from trying to find loopholes or keeping things hidden. The Bill will of course have to pass through both Houses of Parliament before it can become law and with the ongoing Brexit agenda it remains far from certain that this will happen.
The fact that Aqua Italia took money from hardworking employees in the first place is unethical. But, it’s not just been happening there, other well-known chains around the country were also guilty of taking a percentage of tips earned by waiters.
The Employment Tribunal ruling against Aqua Italia can be seen as a warning for employers in the hospitality sector. With the introduction of this new law, steps will have to be made to ensure that no rules are breached. It can be helpful for business owners to seek legal guidance to be certain that they follow the code of practices and don’t end up in employment disputes.
Reduce your hR Headaches
We specialise in fixed-fee Employment Law & HR services.
About the author
James is on the Business Development & Account Management team at Neathouse Partners and regularly posts articles surrounding issues in HR & Employment Law, including case law & legislation updates. If you have a particular issue you would like addressed, feel free to drop James an email, and he will be happy to offer his assistance.
Free Employment Law & HR Managers Manual
free Contract of Employment template