Harrods is latest company accused of retaining service charge
Harrods has been accused of retaining 75% of the service charge in its 16 cafes and restaurants by the United Voices of the World union. Waiting and kitchen staff claim this reduces their pay by £5,000 annually. The high-end store confirmed that it uses a “tronc” system under which service charges are shared, but basic pay is cut. Luxury store Fortnum & Mason also recently attempted to persuade workers at its Heathrow bar to accept a tronc system. Qatar Holding, which owns Harrods, saw sales increase 4% to £1.4bn ($1.7bn) in the year ending 30 January 2016.

Harrods has been accused of shortchanging its restaurant staff in the latest row over how service charges added to diners’ bills are shared among workers.

The union representing Harrods waiters and kitchen staff believes the Qatari owner of the upmarket London department store retains up to 75% of the service charge, a situation it says reduces their pay by up to £5,000 a year.

The United Voices of the World union (UVW) says an unspecified percentage of the service charge collected at Harrods’ 16 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 spokeswoman confirmed that, like many businesses in the hospitality sector, the company operated a “tronc” system, whereby the service charge is shared out.



“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,” she said.



“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.”

Petros Elia, the 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. The TV chef Michel Roux Jr admitted in December that his Michelin-starred restaurant Le Gavroche classed service charge income as revenue rather than tips to be shared among staff. He has since said the restaurant would scrap the charge from the end of January.

The chef also apologised following a Guardian report in November which revealed that Roux 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.Fortnum & Mason does not currently distribute any of the 12.5% service charge collected on drinkers’ bills at Heathrow.

Accounts filed at Companies House show that Harrods’ owner, Qatar Holding – the investment arm of the country’s sovereign wealth fund that acquired the store from Mohamed Al Fayed in 2010 for an estimated £1.5bn – paid itself a £100.1m dividend in 2016.



That followed a record year in which pre-tax profits increased 19% to £168m. Sales rose 4% to £1.4bn in the year to 30 January 2016. The highest-paid director, presumed to be its managing director, Michael Ward, earned £1.6m.

The retailer attracts high-spending overseas tourists and Ward told the Guardian that it had been insulated from the economic gloom emerging in the UK 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 … 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.