The boss of private members club Annabel's has admitted to a “dumb mistake” after more than £70,000 of staff pre-Christmas tips were reportedly taken to pay managers’ bonuses.
The Mayfair venue is famed as the only nightclub ever visited by the late Queen and has been a mainstay for celebrities and royals since the 1960s.
The club bills guests an optional 15% service charge which usually goes to workers, while a £3-per-head cover charge goes to the company. Dining at the venue is typically expensive, with a latte priced at £6, a cheeseburger at £26 and a ribeye steak at £125.
Nevertheless, Annabel's prices mean it can amass more than £100,000 in service charges in just a week, The Guardian reports.
One worker said: "There’s really no fixed salary at all, it’s low," while another added: "Tips are a huge bit of pay. We cannot rely on minimum wage."
As a result, staff were reportedly said to be furious when learned their share of the service charge takings in the lead-up to Christmas had been cut by over £70,000 in order to pay bonuses to about 50 managers.
Some workers are on zero-hours contracts while around 60 per cent of Annabel's staff are paid a rate of £12.76 an hour - just 5 pence above the legal minimum wage - meaning they rely heavily on the gratuities.
The service charges obtained from card payments are shared to around 280 leisure workers using a system called Tronc, while cash tips are handed out separately.
As businesses do not pay national insurance contributions on service charge and tips, it means paying workers in this way reduces the bill to HMRC.
A change of legislation in October 2024 means organisations must distribute 100% of service charges and tips to workers in a transparent manner, with employees given the automatic right to know "how tips are allocated and distributed".
Following the Guardian's investigation, the owner of Annabel's - restaurant tycoon Richard Caring - admitted a “dumb mistake” had been made.
The organisation says it has carried out meetings with workers in late March and April in order to alleviate concerns and this month has shared out an additional £103,000 to reimburse hourly workers in “a gesture of goodwill”.
Mr Caring said: “I believe in openness … Everybody should know what they are getting.”
Mr Caring is in talks to sell his hospitality empire including Annabel’s, Harry’s Bar, The Ivy restaurant group and the upmarket eateries Sexy Fish, Scott’s and J Sheekey to Abu Dhabi’s Sheikh Tahnoon bin Zayed al-Nahyan for a reported £1.4bn.
New legislation will effectively ban zero-hours contracts from September, and it is believed Annabel’s plans to offer staff contracts with at least 20 hours a week.
The IWGB union has dozens of members at Annabel’s and says staff wish to earn at least the independently verified living wage for London of £14.80 an hour.
Henry Chango Lopez, the general secretary of the IWGB, said: “The billionaires and A-listers who make up Annabel’s clientele can spend more on a single meal than the club’s [little more than] minimum-wage, zero-hours staff take home in a month.
“For the Annabel’s staff trying to survive in London on just £12.76 an hour, tips aren’t a bonus – they’re the only thing keeping the rent paid.”
