When guests in the Kentish Town branch of Wahaca left without paying their £40 bill, the company attempted to make a deduction from the waiter’s tips as a contribution to their loss from the walkout. The business has again faced adverse publicity when this came to light – but was it the PR or the deduction from wages that was wrong?

The right to deduct from the waiters’ pay in a ‘dine and dash’ situation

Can a waiter really be expected to prevent a table walking out without paying and can a restaurant really expect him to pay for the shortfall if he prevents them from leaving?

An employer is prevented by law from making an unlawful deduction from the wages of an employee or worker unless:

  • The employee has consented in writing to the deduction prior to the event giving rise to the deduction; or
  • The deduction has been authorised by a provision in the employee’s contract of employment. The provision must be set out in a written contract which has been given to the employee before the deduction is made.

The Wahaca staff handbook said that waiters “Could be liable to pay the whole bill including service” if a customer left without paying.  This was a document which was part of the employee’s signed contract and therefore would give Wahaca the right to deduct money from the waiter’s wages in the event of a dine and dash.  In a statement Wahaca claims that the policy was not clear and was only intended to be invoked, at the manager’s discretion, where a waiter was complicit in the walk out.

Are tips “wages”?

For this purpose, yes.  Wages obviously include basic hourly pay or salary.  Although tips do not count towards the National Minimum Wage they are sometimes regarded as “wages” for the purposes of the unlawful deduction of wages legislation and the current position is that a deduction from staff tips is generally unlawful without the express consent set out above.

The cost of adverse publicity

It looks as though Wahaca did have the consent to deduct from the waiters wages/tips in the event of a table not paying their bill.  However, the case has provoked outrage and disbelief that hospitality staff, who are amongst the lowest paid workers, could be asked to pay for the dishonesty of customers.  Wahaca has announced that they have now changed their policy and that an incident like this would only lead to a call for a waiter to pay if he had been complicit in the walk out.  For the sake of £3 Wahaca have paid a high price in adverse publicity.

Protection for retail workers

If any deduction is to be made it is worth noting that employees in the retail sector, which includes restaurants, do have added protection from deduction from their wages.  Employers often include a provision in a contract allowing them to make a deduction from wages to cover a shortfall in the till.  Government guidelines only permit an employer to deduct up to 10% of an employee’s wages in each pay period to cover a shortfall in the till.  The full amount can be deducted but this may have to be done over a period of months so as not to fall foul of this protection.

The content of this page is a summary of the law in force at the present time and is not exhaustive, nor does it contain definitive advice. Specialist legal advice should be sought in relation to any queries that may arise.