Legal lowdown: The Wahaca ‘eat and run’ incident

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There are wider lessons to draw from Wahaca being compelled to withdraw its practice of deducting pay from staff after customers left without paying

This practice was widely circulated online and in the press following a complaint made on Twitter by a customer at its Kentish Town restaurant.

The manager had decided to charge the waiter £3 on an unpaid bill of £40. Wahaca had a policy whereby waiting staff would be liable to pay the full bill, including service, if through their negligence a customer left without paying. Unite describes this policy as standard industry practice in the restaurant sector. Following the resulting storm of publicity, Wahaca announced it would clarify and update its policy, and in future appropriate action would be taken against the waiter only if they were suspected to be complicit in the walkout and after a full investigation.

The incident highlights the legal risks of making pay deductions in these circumstances, in particular the risk of claims for unauthorised deductions from wages. Deductions clauses in employment contracts are often drafted widely to include the power to recover losses arising from the employee’s negligence. However, the employer must be able to show that the event justifying the deduction took place. There are also statutory provisions protecting staff working in retail employment that limit the amount of deductions made on account of cash shortages to a maximum of 10% of their gross pay.

In relation to lower-paid staff there is also the risk of infringing the National Minimum Wage legislation, and falling on the wrong side of the law about what deductions are disregarded for the purposes of assessing minimum wage compliance. Essentially the employer needs to be able to show either misconduct by the employee or some other event for which the employee is responsible. An unjustified deduction from wages could result in the employee being paid below the minimum wage.

A conspicuous feature of this incident was how Wahaca’s staff policy came into the public domain through social media, and the level of hostility this document attracted. It illustrates the importance when drafting or revising staff policies to consider the document from a range of perspectives, and critically from the viewpoint of customers and potential customers. For example, a new perspective on policies – in particular, those that could be viewed by the outside world as oppressive or unreasonable – is that they may ultimately damage the organisation’s public profile and the quality of its brand in the market.

The Wahaca case also provides a clear example of social media used to wield consumer power and to orchestrate change to business practices. It echoes the previous 'Fair Tips' campaign to expose and transform some restaurants' practices of retaining tips left for waiting staff and levying administration fees to process these payments.

There are growing signs of employees utilising social media for innovative forms of industrial action, although questions remain about their legality and therefore the extent to which trade unions will be prepared to support them. An example of this trend for 'cyber picketing' was a case earlier this year involving Picturehouse Cinemas. Here a union representative was found to have been unfairly dismissed for taking part in trade union activities after she sent an email suggesting the block-booking of cinema tickets online to prevent genuine sales, in connection with ongoing industrial action that her union was pursuing.

Businesses across the hospitality and retail sectors can expect future instances of the combined forces of collective industrial action and consumer campaigning using social media and other digital tools to challenge their employment practices.

Patrick Glencross is a senior associate at Cripps Pemberton Greenish

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