Harrods staff to protest against unfair tips policy

Harrods has been accused of retaining up to 75 per cent of the service charge.
Harrods has been accused of retaining up to 75 per cent of the service charge.PHOTO: INSTAGRAM/ HARRODS

LONDON • British luxury department store Harrods is being accused of shortchanging its restaurant staff, in the latest row over how service charges added to diners' bills are shared among staff.

The union representing Harrods waiters and kitchen staff believes the Qatari owner of the London store retains up to 75 per cent of the service charge, a situation it claims reduces the pay of waiting and kitchen staff by up to £5,000 (S$8,887) a year.

The United Voices of the World union (UVW) says an unspecified percentage of the service charge collected in Harrods' 16 company-run cafes and restaurants is shared among the 483 kitchen and waiting staff.

It is organising a demonstration outside the Knightsbridge department store on Saturday as part of a call for greater transparency.

A Harrods spokesman confirmed that, like many businesses in the hospitality sector, the company operated a "tronc" system, whereby the service charge is shared - but only if they accept a cut in basic pay.

"Harrods is taking steps to improve the current system through which it distributes its service charge, to ensure it best serves our employees and is completing a detailed review into the existing scheme," the spokesman added.

"As this is an ongoing review, we are unable to provide further details on the distribution. However, employees will be informed of the details of the new system as soon as the review is complete."

Mr Petros Elia, UVW general secretary, said: "Customers expect the service charge to go to staff and that's where it should go. If Harrods feels the need to retain a percentage they should explain why."

What happens to the cash generated by the service charge applied to bar and restaurant bills has become a moot point.

TV chef Michel Roux Jr admitted last month that his Michelin- starred restaurant Le Gavroche classed service charge income as revenue rather than a tips jar to be shared among staff. He has since said the restaurant would scrap the charge from the end of this month.

The chef also apologised following a Guardian report in November that exposed how he was 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. The store does not distribute any of the 12.5 per cent service charge collected on drinkers' bills at its store in Heathrow.

Accounts filed at Companies House show that Harrods' owner, Qatar Holding - the investment arm of Qatar's sovereign wealth fund that acquired the store from Mohamed Al Fayed in 2010 for an estimated £1.5 billion - paid itself a £100.1 million dividend last year.

That followed a record year in which pre-tax profits increased 19 per cent to £168 million. Sales rose 4 per cent to £1.4 billion in the year to Jan 30 last year. The highest-paid director, presumed to be its managing director, Mr Michael Ward, earned £1.6 million.

The retailer attracts high-spending overseas tourists and Mr Ward said that it had been insulated from the economic gloom emerging in Britain since the Brexit vote.

"Christmas has been particularly strong this year," he said, pointing to solid demand for bags, shoes and diamonds, with Yves Saint Laurent and Gucci among the most popular brands.

"The top end of the market is always less affected than anyone else. The second (factor why Harrods is protected from Brexit) is to an extent London is a bit of a bubble in the United Kingdom. So from our perspective, we've got great local customers plus we've seen more international customers come to London."

Qatar's sovereign wealth fund, the Qatar Investment Authority, was founded in 2005 to help the Gulf state strengthen its economy by investing its oil and gas riches in other assets.


A version of this article appeared in the print edition of The Straits Times on January 04, 2017, with the headline 'Harrods staff to protest against unfair tips policy'. Print Edition | Subscribe