The case, which has been brought by 29 workers and is backed by the United Voices of the World (UVW), is seen as a test case that could lead to changes at other restaurants.
The workers argue that the compulsory £1 cover charge functions in practice as a service charge and should therefore be shared among employees. They also claim that restaurant managers have discretion to remove the cover charge on request, reinforcing that it functions like a tip.
Harrods denies the allegations and says the dining charge is separate to the service charge.
“In line with other high-demand luxury dining destinations, Harrods applies a £1 per person cover charge," it says.
“This compulsory fee supports in providing the high-quality offering of our restaurants.
It is entirely separate to the discretionary 12.5% service charge to recognise the service that has been received.
“We will continue to engage directly with our colleagues on all issues related to pay and benefits, to ensure they remain industry-leading and guided by our values and colleague commitments.”
UVW further alleges that Harrods has failed to provide a clear written policy or full records explaining how the revenue from the cover charge has been handled.
The union says the case is the first legal challenge in the UK to test the definition of a tip under the Employment (Allocation of Tips) Act 2023, which came into force in October 2024, which requires businesses to pass all tips and service charges on to staff in full.
Workers also claim that since the introduction of the cover charge in November 2023 (mandatory from October 2024), some customers have opted to remove the separate discretionary 12.5% service charge from their bills.
“Harrods introduced this cover charge out of nowhere and without any transparency as to its purpose,” says claimant Alice Howick, a UVW member and former Harrods waiter.
“As those who are responsible for ensuring customer satisfaction, the front of house staff have been forced to justify this charge for years, with the knowledge that customers are unknowingly paying to take a seat at a table in Harrods despite there being no additions to or improvements in what they receive.
“Whilst the cover charge still exists, it should be going towards the staff who prepare and serve the food and drinks, the quality of which guarantees that customers walk through the door and Harrods makes as much money as it does.
“Until then, the charge serves only as a further income opportunity for a company that has never been short of money, priding itself on being the world’s leading luxury department store.”
The dispute is not the first between the union and Harrods. In 2017, UVW secured a ruling that resulted in 100% of tips being distributed to workers.
The union says that campaign contributed to raising national awareness around fair tip allocation and helped pave the way for the 2023 legislation.
Since then, Harrods workers have undertaken five campaigns, three strike ballots and secured a reported 25% pay rise, according to UVW.
Petros Elia, UVW’s general secretary, adds: “Our members’ history at Harrods speaks for itself.
“Time and again, meaningful improvements have only come when workers organised, challenged management and were prepared to take action. The 2017 victory helped put tip fairness on the national radar, and now the new Employment (Allocation of Tips) Act gives workers legal backing.
“If Harrods has introduced a new charge that walks and talks like a service charge, then it should be treated like one, and paid fairly and transparently to waiters and chefs.
“Instead, we are once again seeing what can only be described as Scrooge behaviour from a company that can more than afford to do the right thing.”
Harrods adds it has paid 100% of service charge directly to colleagues since January 2022, more than two years ahead of the Employment (Allocation of Tips) Act.