ES News email The latest headlines in your inbox twice a day Monday - Friday plus breaking news updates Enter your email address Continue Please enter an email address Email address is invalid Fill out this field Email address is invalid You already have an account. Please log in Register with your social account or click here to log in I would like to receive lunchtime headlines Monday - Friday plus breaking news alerts, by email Update newsletter preferences

A top restaurant chain is taking the entire service charge it automatically adds to bills rather than giving it to staff as tips, the Standard can reveal.

Cote has been accused by campaigners of “misleading” customers with its “outrageous” policy that the 12.5% charge goes straight to the company instead of being kept by workers at the restaurant where the diner ate.

The chain - which has 72 restaurants including 30 in London – defended the practice by saying it allows them to pay restaurant staff an hourly rate of around £7.50-£8, above the national minimum wage of £6.50 for over 21s. However, this is below the London Living Wage of £9.15.

One staff member told the Standard: “We are told by management that we don’t get to keep the service charge because we get paid more than the minimum wage, so we should be grateful, but most of us would prefer earning the minimum wage and taking home our tips for the hard work we do.”

According to workers, staff are told to tell customers who ask where the service charges goes that it is given out between workers.

That is exactly what a Standard reporter posing as a diner was told by a member of staff at one branch last night.

A senior MP told of the practice today accused the restaurant chain of effectively telling its staff to “lie” to customers.

The charge is optional, but is added automatically to the bill meaning diners have to ask for it to be removed.

Cote said waiting staff can decide whether to keep any cash tips left on top of the service charge or put it into a general pot to be shared with other members of staff.

However, the staff member told the Standard they were told to hand over cash tips: “One night I was waiting a large group and had to split the bill for each guest. At the end they left a £100 cash tip, but I was forced to hand it over to my manager and never saw that money again.”

Iain Wright MP, chairman of the Business Select Committee, warned that many other restaurants and hotels could have a similar policy.

He said: “When you go into a restaurant you have a direct relationship with that waiter and you want to reward them for looking after you. I’m particularly outraged that the firm would tell staff to essentially lie to customers. If I say to someone serving me in a restaurant, “do you get the service charge” I expect it to go 100% to them as a tip for great service. For Cote to say it’s going to the bottom line rather than in people’s pockets is unacceptable.

“There’s a principle of making sure the tips that you give over and above the bill of the restaurant is given to the staff. It’s hugely important and should be given 100% to the staff to show your thanks.

I think we have to expose some of the negative business practices that don’t help the staff.”

The politician said he would also raise the issue with the select committee and would be keen to shine a light on the practice to see how widespread it is.

He added: “This seems to be the tip of the iceberg. There’s a principle of making sure the tips that you give over and above the bill of the restaurant is given to the staff. It’s hugely important and should be given 100% to the staff to show your thanks.

“I think we have to expose some of the negative business practices that don’t help the staff. Legislation is a last resort, but this should certainly be looked at and I’m grateful to the Evening Standard for exposing such an important issue.”

It is not known how long the policy has been in place at the chain, whose profits last year jumped 27% to £16.3 million. Cote was bought by private equity giants BC Partners last month.

The revelation comes as unions and campaigners have been calling on major restaurant chains to scrap charging administration fees on processing tips left for staff on credit and debit cards. Several chains including Pizza Express, Strada, Zizzi and Ask Italian charge between 10% and 8% to staff to claim back their tips paid on cards. The restaurants say the fee is used to cover the costs of distributing the tips.

Dave Turnbull, Unite’s officer for the food and drink sector, said: “It is simply outrageous. The sheer audacity of the [Cote] scheme is incredible.

“Unfortunately, in the eyes of the law the ‘service charge’ belongs to the company, but it is entirely misleading. Similar tactics are already widescale in the hotel sector as a way for companies to increase revenues.

“Our view is very straight forward – a tip is a tip and we should see 100% of it go to staff.”

In 2009 new rules were brought in to stop restaurants paying staff a basic wage below the minimum wage and using tips to raise their pay above the level.

A spokesperson for Cote said: “At Cote the optional service charge is used to increase the pay of all restaurant level staff above what would typically be seen as market standard. Whereas the base salary for a waitress in the industry would typically be minimum wage, currently £6.50 per hour, we are able to pay more like £7.50-8.00 per hour through using the service charge.

“This applies to all restaurant level staff, as good service is a team effort from the person serving the food to the person cooking the food or cleaning the kitchen.”

What the customers say: ‘I didn’t know … it should absolutely go to the staff’

Emily Handford, 26, an editor from Clapham: “I didn’t tip because I thought the money from the service was going to the waiters. Even though service charge says it’s optional you don’t feel like you can ask for it to be taken off. Côte is misleading people. You think they are a nice company. The staff work really hard and deserve their tips. In future I will probably pay the tip in change.”

Abi Morgan, 26, a teacher from Brighton: “I expected the service charge to go to staff – even then I don’t like it as they have to pay tax on that. I think people should decide how much they tip based on the service they got. It’s such a shame they are doing this. People probably think they don’t need to tip because of the 12.5 per cent. The staff must feel quite cheated.”

Tim Duff, 34, a consultant from Wimbledon: “There were three of us dining and we paid about £35 each. We all paid the 12.5 per cent. I’m surprised it didn’t go to the staff and I didn’t leave a tip because of that. They do deserve it and I would expect that money to go to them. If people knew they would probably stop paying it.”

Megan Sheraton, 26, a researcher from Hackney: “We didn’t tip because we thought we already had left a tip through the service charge. You take things at face value. Our waiter was very good. If the company are going to keep it then they should add that money on to the meals, otherwise it’s very misleading. It does leave a bit of a bad aftertaste. I just feel bad for the waiter.”

Nick Coutts, 66, company director from Elephant and Castle: “I didn’t know they did that. I would prefer to go to somewhere that when I tip I know the money goes to staff. I was with a friend and we split the bill of £92. Service charge is so unclear. It should absolutely go to the staff. We need clarity.”