Harrods is facing a legal challenge from 29 restaurant workers over a mandatory £1-a-head cover charge, a fee the employees claim should be distributed as part of their tips. The case, slated to be heard in September, centers on whether the charge functions as a service charge under the Employment (Allocation of Tips) Act 2023, which came into force in October 2024.
The United Voices of the World (UVW) union is backing the workers, who argue that Harrods retains the cover charge despite legislation requiring businesses to pass on all tips and service charges to staff. Harrods currently distributes a separate, optional 12.5% service charge to its more than 330 restaurant employees, but not the compulsory £1 charge applied to each diner.
Alice Howick, a former Harrods waiter and one of the claimants in the case, stated that the introduction of the cover charge lacked transparency. “Harrods introduced this cover charge out of nowhere and without any transparency as to its purpose,” she said. “Whilst the cover charge still exists, it should be going towards the staff who prepare and serve the food and drinks, the quality of which guarantees that customers walk through the door and Harrods makes as much money as it does.”
Petros Elia, general secretary of UVW, described the situation as “Scrooge behaviour” from a company with the financial capacity to act differently. “If Harrods has introduced a new charge that walks and talks like a service charge, then it should be treated like one, and paid fairly and transparently to waiters and chefs,” Elia said.
This legal action follows a previous dispute over pay and conditions at Harrods eateries, which culminated in a strike in 2024. Harrods maintains that the £1 cover charge is standard practice for luxury dining establishments and is distinct from the discretionary service charge. The department store asserts it has been distributing the 12.5% service charge to staff since January 2022, predating the Employment (Allocation of Tips) Act.
According to a Harrods spokesperson, the company’s approach to pay is based on “ongoing, collaborative and direct dialogue with colleagues.” The spokesperson also noted that UVW is not a recognized union by Harrods and was not involved in the development of its pay policies. “We will continue to engage directly with our colleagues on all issues related to pay and benefits, to ensure they remain industry-leading and guided by our values and colleague commitments,” the spokesperson stated.
The dispute at Harrods occurs as the department store addresses claims of alleged abuse by its former owner, Mohamed Al Fayed. A compensation scheme established in March 2024 has already resulted in payouts to over 50 women who have come forward with allegations dating back to 1977, and is set to close to new submissions on March 31st.
Other restaurants in London, including The Ivy, The Delaunay, and The Wolseley, also levy a cover charge, though it remains unclear whether they will face similar legal challenges. The outcome of the Harrods case is expected to set a precedent for how the Employment (Allocation of Tips) Act 2023 is interpreted and applied across the UK hospitality sector.
