At last the government is fixing tipping. It should also fix poverty pay

The problem with the tipping law, belatedly announced last week, is that it ever so slightly misses the point.

That doesn’t mean that is isn’t needed or welcome. It is both.

There has long been a problem in this country with card-based tips, which now account for 80 per cent of the take according to the government.

In the past, some restaurant chains took to charging transaction-processing fees on gratuities paid this way. Following outrage, this was dropped. But of late the subject has been in the spotlight again, as waiting staff at some outlets fear that employers are seeking to reform the “tronc” system.

This is a fund of tips that is then divvied up. If you boost the proportion going to the cooks, who are in short supply, you have a backdoor way of increasing their wages without affecting your profits. There have been suggestions that some chains could also even boost managers’ wages like this.

The problem is that this robs Penny’s pennies to pay Paula.

So to the law: it will make it illegal to divert tips or service charges from workers. Fines, and orders to compensate them, could result if the law is breached.

It is a pity that workers will have to go through the pain of bringing employment tribunal cases if their employers do this. But I imagine unions such as Unite – which has campaigned hard on the issue – will be willing to provide backing in the event this becomes necessary.

A high-profile case of this type is a good way of demonstrating the value of union membership.

A statutory code of practice will also be developed, after further consultation, to deal with the way tips are shared out. Workers will get the right to request information on an employer’s tipping record, too.

Where, then, is the problem I raised at the outset? It is the fact that Penny has to rely on being tipped pennies, rather than earning a living wage in the first place.

The controversies bubbling over tronc systems simply serve to emphasise the fact that waiting staff are, as a rule, poorly paid. Reducing their tips hits them with a cut at the worst possible time, given that both inflation and national insurance are on the rise.

The problem extends beyond waiting staff. You don’t tend to tip McDonald’s workers, for example (there’s a famous scene in Reservoir Dogs where this is discussed). They have to survive on their basic wage.

Bar staff are sometimes tipped, but not to the extent they are in America. There’s usually a pot for cash tips for the baristas in coffee shops. But they’re not going to get ten or 12 per cent of the bill, either.

This would matter less if their wages were improved. And it is perfectly possible to do that.

The economist and columnist Paul Krugman, writing in The New York Times, recently made the oft-repeated point that Maccy D’s manages to pay its workers the equivalent of around $22 (£16, €19) an hour in Denmark.

Fact-checking website Snopes, in March, turned to the prices listed by Uber Eats (in the US) and Just Eat (Denmark) to gauge the price of a Big Mac, and found that there was little difference between those available in Copenhagen and those sold in Tulsa, Oklahoma. Of course their relative prices will change in response to currency movements, but at the time the exercise was undertaken, the Copenhagen Big Mac was, in fact, slightly cheaper.

The lesson here is that you can pay your service workers more while still keeping prices competitive. Who knew?

The proposed tipping legislation, while welcome, treats one of the symptoms of low wages. It does not cure the disease.

The Living Wage campaign’s rate of £9.50 an hour outside London, £10.85 within it, for companies that sign up for accreditation, is set in reference to the cost of living. It’s not £16, but it is a good start.

It is certainly a lot better than the government-mandated minimum of £8.91 for those aged 23 and above, falling to £8.36 for those aged 21 and 22, £6.56 for those aged 18-20, £4.62 for younger people, and £4.30 for apprentices. These are not living wages.

It’s good that the government is fixing tipping, but it should also fix the fact that some jobs still don’t pay enough to live on. It should make what it calls the national living wage – the minimum wage – a proper living wage.