Labour minister Kenneth Hodge has provided clarification on how tips and service charges should be distributed to hospitality staff in Anguilla.
Speaking during a government press conference on 27 January, he said several employees had reached out to him with concerns about not receiving their rightful share of collected gratuities.
He explained that tips are voluntary payments given directly to staff, while a service charge is a set fee added to customers’ bills by a business.
“It is my understanding that employers are forcing employees to hand over tips that are received personal in hand from guests,” he said.
“That is wrong. These tips are for the sole use of the employee to whom the tips are provided.”
However, he said that if the guest leaves a tip on a credit or debit card, this can be added to the service charge pool to be later distributed among all staff.
Service charge
Hodge went on to explain that where service is charged at an establishment, the employer is required to pool it and distribute it among all employees every four weeks.
If the establishment has at least five employees, a service charge committee must be established, he said.
“The employers cannot, cannot, solely, in this instance, be making the decisions on how service charges [are] to be distributed,” Hodge stressed.
The service charge committee must consist of four people – two appointed by the employer to represent the employer, and two persons elected by employees to represent their interests.
The committee decides the basis of mechanism by which service charge is divided, and reviews the calculation of service to be received by each employee during the pay period.
It is also responsible for making the division available to employees so they have clarity and understanding, the labour minister continued.
Division among employees
Service charges are expected to be divided among all employees who provide service during a period, less 5% to cover the administrative expenses of the employer, Hodge explained.
The usual ways of dividing service charges include an hours system or a points system.
All employees are entitled to receive service charges, including senior managers, however, in some companies, executive team members have chosen not to be included.
Hodge said that despite this, there is a trend, particularly in smaller properties, where the senior management are receiving a cut of the service charges.
“I am asking here this afternoon that employers and service charge committees make fair, just and equitable decisions as it relates to the distribution of service charge,” he said.
Employers that fail to comply with these rules as set out in the Labour Relations Act could be liable for a fine of up to $10,000.
