A London restaurant chain has drawn criticism for replacing its card payment tip option with an optional 15% 'brand charge', just months before new legislation requires all tips to be given to staff.
Ping Pong, which operates five dim sum outlets in the capital, said the new fee would go towards 'franchise fees and other brand-related expenditure', replacing a 12.5% service charge of which 90% went to employees. The company is testing the idea as an alternative to raising menu prices and will decide in June whether to make the charge compulsory or increase prices.
The parent company, AJT Dimsum, said it had increased staff wages by 19% from £10.42 to a minimum of £12.44 an hour – £1 above the new legal minimum – which it argued would match earnings workers would have received from the service charge. Employees can also earn bonuses of £1 or £2 an hour based on sales targets. Customers may still leave cash tips, though many no longer carry cash.
Bryan Simpson, lead organiser for hospitality at the Unite union, called the move 'a complete slap in the face' for workers. He accused Ping Pong of 'cynically changing the service charge to a brand charge to circumvent the new fair tips legislation', saying it was 'one of the most blatant examples of tips theft' the union has encountered. 'No matter what senior management call it, customers will assume that this 15% is a tip that should go to workers, but it won't,' he added.
The union plans a national campaign for fair tips ahead of July, when the new law comes into force ensuring all tips and service charges go to staff. AJT Dimsum defended its approach, saying stable wages benefit employees by reducing seasonal impacts and improving access to financial products like loans and mortgages. However, the shift from service charge bonuses to wages may increase short-term tax and national insurance contributions for staff.
