Several London restaurants are being accused of avoiding the UK’s new tipping law. The Employment (Allocation of Tips) Act 2023, in force since October 2024, legally mandates that all tips and service charges must be distributed fairly and transparently among staff. However, some restaurants have started adding “admin fees,” “cover charges,” or “brand fees” of up to 12.5% for “restaurant costs”. These “fees” go to the business meaning workers receive none of it.
Union representatives, including Unite’s Bryan Simpson, have criticized the move as a form of “tip theft”. They have accused businesses of exploiting loopholes to retain customer payments meant for staff.
Other restaurants such as Harrods, The Wolseley, Ping Pong, Big Mamma Group, and Gaucho have introduced similar charges or made changes to how tips are shared. Businesses argue that rising costs – higher wages, taxes, energy, and rent – are forcing them to find new ways to stay financially viable.
Many owners say the fees help cover essentials without raising menu prices. Critics on the other hand warn they confuse customers and disadvantage hospitality workers. Analysts predict that next year will be extremely challenging for the restaurant industry, with more than one in ten UK restaurants at risk of closure.