Harrods sued over £1-per-guest dining fee that bypasses staff payments.

Harrods is confronting a tribunal claim over a £1‑per‑person cover charge added to diners’ bills that, according to staff, does not reach employees. The case could set a precedent for a number of upscale eateries.

The rule, which took effect in October 2024, obliges owners to pass all tips and service charges on to their workers. Some venues, including those within Harrods, impose a compulsory cover charge in addition to an optional service charge, but only the latter is distributed to staff.

An employment tribunal hearing scheduled for September will consider a claim brought by 29 Harrods restaurant employees with the backing of the United Voices of the World (UVW) union. The workers contend that the cover charge operates in practice as a service charge and therefore should be shared with them rather than retained by the department store.

This is the first challenge in the United Kingdom to interpret what counts as a tip under the Employment (Allocation of Tips) Act 2023. The legislation requires restaurants, cafés and hotels to allocate all customer‑paid tips, gratuities and service charges fairly among the staff at that location.

Harrods, which employs more than 330 people across its dining venues, forwards the optional 12.5 % service charge to employees but does not pass on the mandatory £1‑per‑head cover charge that was introduced in its London restaurants and cafés before the new law.

Other establishments that also apply a cover charge include the Ivy, the Delaunay and the Wolseley in central London.

Employees argue that Harrods’ managers can waive the cover charge on request, effectively treating it like a tip. Harrods disputes that description.

Alice Howick, a former Harrods waiter and one of the claimants, said: “Harrods introduced this cover charge without explanation or transparency. While it remains in place, the money should go to the staff who prepare and serve the food and drinks that bring customers through the doors and generate Harrods’ revenue.”

Petros Elia, UVW’s general secretary, added: “If Harrods has created a new charge that functions as a service charge, it must be handled as such—paid fairly and transparently to waiters and chefs. Instead we are seeing what can only be described as Scrooge‑like behaviour from a company that can easily afford to do the right thing.”

The dispute follows earlier tensions over pay and conditions at Harrods’ eateries, including a strike earlier in 2024.

Harrods maintains that its compulsory cover charge is “in line with other high‑demand luxury dining venues” and is “entirely separate from the discretionary 12.5 % service charge.” The company notes that it has been passing the full service charge directly to staff since January 2022, more than two years before the Employment (Allocation of Tips) Act took effect. The service charge is calculated on the total bill, including the cover charge, meaning staff receive a 12.5 % share of that amount.