In the spring of 2020, shortly after they were furloughed from their bartending jobs, Jenny Griffiths and her partner Philip David fell behind on their rent. By November the couple had been forced to leave their home in London and move back to Wales, where they grew up.
“We couldn’t see any light at the end of the tunnel for the London [hospitality] industry,” Griffiths said, “so we just bit the bullet and said we’re going to move back.
“We had a really tight group of friends. Having to leave them behind was really difficult. It does still choke me up. It was heartbreaking.”
Griffiths could have stayed in London if her furlough payment, set at the standard 80% of regular wages, had accurately reflected the full amount she earned. But like many hospitality workers, she relied on tips to top up her hourly wage. Known in the industry as ‘tronc’, a communal fund for tips or service charges that is distributed among all staff, this can form up to 60% of what workers take home.
Yet wages gained through tronc payments have been excluded from the UK’s Coronavirus Job Retention Scheme, forcing many hospitality workers to survive on sums far below their typical income.
“Losing that much money just makes it impossible to survive”
“On our normal wage in London, we had a comfortable lifestyle. We were going to nice bars, eating out every week. We weren’t struggling financially. But with the tronc taken off, our wages were closer to 50-60% [of our monthly pay],” Griffiths said.
This left Griffiths and David short by £1,400 each month. They immediately knew they were going to struggle with rent and contacted their landlord to request an affordable payment plan, but this was refused.
“When two-thirds of your wage in London is going on your rent, losing that much money just makes it impossible to survive,” said Griffiths.
“[The landlord] didn’t give us any leeway at all.”
On the streets
Other hospitality workers are facing similar difficulties. Ever since the nation’s bars and restaurants first closed their doors last March, Anna Sebastian has been helping to feed and clothe the growing numbers of fellow hospitality workers who have been made homeless. Sebastian, who is normally a bar manager at the Langham Hotel in London, volunteers with Under One Sky, a charity that has been supporting homeless people in central London throughout the pandemic.
“We just saw a huge rise in homelessness,” said Sebastian. “So many new faces came onto the streets.”
Sebastian estimates that 30% of homeless people she has met during the pandemic are former hospitality workers. While the furlough scheme has undoubtedly been a “lifeline”, she thinks that these numbers can be partially attributed to the exclusion of tronc payments.
“I would meet so many people that were getting furloughed but were only getting around £400 in furlough a month, and they just couldn’t afford to pay rent,” Sebastian said. “So whilst they still had a small amount of money they were living on the streets because they had nowhere else to go.”
When asked by openDemocracy about the exclusion of tronc payments, a Treasury spokesperson said that tips were ineligible for furlough support, as they were discretionary payments, unlike contractual overtime or commission. “The objective of the scheme is to enable employers to keep people in employment,” said the spokesperson.
“To achieve this, the grants compensate employers for the payments that they are contractually obliged to make in order to avoid the need for redundancies.”
For Griffiths, this is little consolation. “The government has completely thrown hospitality under the bus during this pandemic,” she said. “Hospitality is the third biggest employer in the UK and they’ve screwed us over.”
A petition asking the government to include service charges in furlough payments was ignored
Tronc is taxable income, declared to HMRC and distributed by employers via a separate payroll to hourly wages. “If I paid tax on it, I should be able to claim it back from the government,” Griffiths said.
Last April, more than 30,000 people signed a petition asking the government to include service charges in furlough payments. But this was ignored, even when the government extended the Job Retention Scheme in October, November and December.
The Treasury spokesperson told openDemocracy that the UK’s support package is “one of the most comprehensive in the world – with generous income support schemes, billions paid in loans and grants, tax deferrals and strengthening our welfare safety net.
“All our support is targeted to make sure we use public funds responsibly, helping those who need it most as quickly as possible, while minimising fraud risk.”
What about the owners?
While many people in the hospitality industry are angry with the government, others believe that the pandemic has exposed the unstable and sometimes exploitative practices that existed long before COVID-19.
Luca Mathiszig owns Hill & Szrok, a butcher and restaurant in east London. When he first opened the business seven years ago, he decided not to add a service charge to customers’ bills, because “as the owner of the restaurant, I should be the one who is paying my staff extra”.
Mathiszig soon found that customers expected to pay for service and he wanted tips to be fairly distributed among staff, so he introduced a tronc system. He guaranteed staff a base rate of around £12 an hour and “if it ever fell below that amount, I’d always top them up. If they got extra, they’d always take that home.”
The introduction of the Job Retention Scheme has reinforced Mathiszig’s concerns about the extent to which employers rely on tipping to pay their staff.
“There were just these horror stories of managers working for these big restaurants that were on salaries of around £35-40,000 a year but were only being allowed to furlough at 80% of their set rate which was sometimes minimum wage,” he said. “So people that were taking home £2,500 were being furloughed at something like £800 a month.”
Although Mathiszig thinks the government is “at fault”, he says that restaurant owners also need to take responsibility.
“The restaurants have been profiting from it [tronc] for years. If you go into a restaurant and leave a tip, you’re not giving a member of staff a bit of money to say thank you for extra service, you’re just helping the company pay wages.”
In some cases, high-profile restaurant chains have been criticised for keeping tips for themselves. In 2015, Pizza Express was found to deduct 8% from tips paid on credit cards. The same year, it was revealed that the Las Iguanas chain required staff to pay their employer 3% of table sales generated.
Mathiszig was irritated by the way wealthy restaurant owners portrayed themselves on Instagram during the first lockdown.
“It was atrocious that you see these restaurant owners in their huge homes trying to teach you how to make pasta, or bread, while their staff were struggling,” he said. “Some people could have put their hands in their pockets to help their staff.”
In an Instagram post in July, Mathiszig announced that he would be abandoning tips altogether and instead paying his staff a higher hourly wage.
Increasing staff salaries means that prices have gone up. But according to Mathiszig “it’s worked out really well”, and the customers don’t seem to mind either. A better base salary also provides long-term security for staff.
“It gives them the opportunity if they want to borrow money, go to the bank, get a mortgage, get a loan. It’s more of a proper career for people,” he said. “If I can’t afford to pay my staff this and people don’t come and eat here then it’s just a business that doesn’t work and I have to accept that.”
‘It was just devastating to see’
Griffiths feels lucky compared to some of her colleagues – thanks to her partner’s mother, she has a roof over her head and is now making ends meet by selling bottled cocktails from home. But she knows that without the help of friends and family “we’d be out on the streets”.
Others haven’t been so fortunate. Sebastian recalls meeting a former hospitality worker who became addicted to the drug spice after a month on the streets.
“Within one month he had changed completely,” she said. “It was just devastating to see.
“These people – from your 21-year-olds to your 50-year-old who was working at a Mexican food truck in the City – just don't have enough money to survive.”