Two people have been arrested following a protest at department store Harrods, over claims management kept 75 per cent of tips left for waiters working in the store's cafes and restaurants.

A smoke bomb was reportedly let off and roads in the Knightsbridge area of central London were blocked during the action on Saturday afternoon.

Dozens of hospitality staff joined the demonstration, which was organised by the United Voices of the World (UVW) union.

The Metropolitan Police said an 18-year-old man was arrested on suspicion of setting off a flare.

A 51-year-old woman was also arrested on suspicion of criminal damage and assaulting a police officer.

Harrods had pledged to improve tips for its catering workers after the union threatened strike action – but workers are demanding they receive the full 100 per cent.

Harrods butlers serve mince pies, tea and coffee to queuing crowds ahead of the opening of the Harrods winter sale in Knightsbridge, London (PA)

UVW's general secretary, Petros Elia, said Harrods was keeping up to £2.5m a year in tips from its hospitality staff.

If correct, the figure is equivalent to the store depriving each of its catering staff of up to £5,000 a year.

A former Harrods waitress, who did not wish to be named, told The Independent the practice dated back to at least 2011.

"It was an awful place to work," she said. "Putting a 'discretionary' service charge on stopped customers giving us cash tips, and we knew we weren't getting anywhere near the full 12.5 per cent.

"The restaurant was always full of stressed, angry shoppers, and we were often treated terribly by both customers and managers. Knowing we wouldn't even get the full tips was insult to injury really."

There is currently no law requiring restaurants to hand over all tips to their staff. Industry guidelines suggest restaurants can keep a proportion of tips, to cover their costs.

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However the Business Secretary Sajid Javid has said gratuities should go to the people they were intended for.

Harrods currently operates a “tronc” system, which means that the 12.5 per cent service charge is distributed equally among all catering staff, and paid monthly.

But the department store has declined to disclose exactly how much of the service charge is retained by management.

Petros Elias, general secretary of the UVW union, said: “The lack of transparency in the system gives Harrods huge power over its staff. Catering wages are barely enough to survive on in London, and waiters in particular depend heavily on tips just to get by.”

Another luxury retailer, Fortnum & Mason, recently came under fire for asking staff to take a cut in basic pay in order to receive a portion of the service charge under a tronc system.

A Harrods spokeswoman told the BBC the store employed more than 450 workers in its 16 restaurants, all of whom were paid “fairly and above national living wage”.

She reiterated that the store is currently reviewing the tipping system and employees would be given details of the new system, as soon as a review is complete.