"We don't get paid wages here," said a waiter at Chinatown's Furama Restaurant. "We only have tips of around £200 a week. The service charge goes to the employer. We don't get a penny."
This testimony is not an anomaly. Catering and hotel employers are making their own rules and there is no legal basis from which to challenge them.
The practices of one catering company, Green Events Ltd, provide a useful example. Prior to January waiters were paid £6.25 per hour plus 10 percent service charge. Under the new system, however, they are paid just;£4.25 per hour. Their employer uses the service charge to meet the minimum wage.
"The company lied to workers during interviews that they would be paid £6.25 per hour," a former Green Events Ltd employee revealed. "When they started the job they still did not realise that their below minimum hourly pay was complemented by the service charge." Green Events Ltd refused to comment.
London's Chinatown has long prided itself on being a tourist attraction with its high standard of cuisine, but the majority of restaurants keep their waiters on poverty pay. Some 99 percent of restaurants in Chinatown use tips, or a combination of tips and service charge, as pay.
"We would have nothing to eat without the service charge and tips. We're paid £5 a day as a base rate of pay," reveals one waiter at Gerrard Corner, who works 11 to 12 hours every day, six days a week, exceeding the 48 hour weekly limit.
This wage structure is typical in Chinatown. It is used by many popular restaurants including Lee Ho Fook, New World and New Loon Fung. One waiter at New Loon Fung said, "Our base rate is £50 a week. The method of distribution for tips is up to our employer; there's no need for him to consult us."
Waiters at Crispy Duck are paid just £30 a week base rate with wages coming from tips and part of the service charge. At New China Restaurant wages come from part of the 12.5 percent service charge. But even those who have been working there for over a year have no idea how much of the service charge goes to pay them.
A waiter at Loon Tao restaurant said that waiters are not entitled to tips if they are off sick. "We don't have any contract with the employer. How can we argue about this? We have nothing to bargain with."
At Corean Chilli neither tips nor service charge go to the waiters, who are paid just £5 an hour. "Customers often think that the tips they give are for rewarding the waiters, but these go straight into the employers' pocket," said one.
Under these various systems, most waiters - working up to 70 hours a week - are not paid the minimum wage.
Despite this, one restaurant owner claimed that "the relationship between employers and employees is a harmonious one in Chinatown".
Activists in the Transport and General Workers Union (T&G) have recently launched a tips and service charge campaign. Regulations in the National Minimum Wage Act enable employers to include tips in wages to meet the minimum wage while paying little or nothing. A recent survey by the union shows that employers use the legal loophole while "refusing to accept that such payments constitute contractual pay".
"As a result many workers are burdened with a pay cut when they take a holiday or sick leave. This also results in shortfalls in redundancy and notice pay," continues the survey report. "Employers are [also] quick to make deductions from tips to cover breakages, customer walkouts, etc."
Tronc systems are supposed to allow staff to distribute their own tips without employer influence. However, as the survey shows, "a growing number of employers appoint a member of management as troncmaster and manipulate the rules of distribution influencing the level of income to staff while avoiding any direct employer liability."
Campaigners argue it is time to fight for a fair and transparent system, and to amend the National Minimum Wage Act to treat tips as an addition to hourly rates of pay. They also demand the £7.20 London Living Wage, independent of tips.
"The tips system should be phased out," argues Pat Boyle, chair of T&G's catering branch. "Service charges, if retained, should be organised and run by the staff and shared."
For more information go to www.tgwu.org.uk.