19 May 2022

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Service charges, tips, gratuities in hospitality – who should get them?
Adrian Leopard 366

Service charges, tips, gratuities in hospitality – who should get them?

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It is amazing what ill feeling can arise over the issue of tips and service charges

One of the most controversial issues in the hospitality trade is the treatment of tips, or service charges, or gratuities by whatever name they are actually called.

It has always been a plank of the hospitality trade in Britain for customers to leave tips. But the system is not the same everywhere. In Europe for example, tips tend not to be left as employers maintain that “theirs is a respectable profession and gratuities are included in the charges made for the meals and their staff are properly paid”.

In the USA, a very different system pertains – it is quite common to find that serving staff do not get paid any wage at all – their income is derived from the tips the customers leave. Often, the pay given to serving staff is deliberately low because staff are expected to receive tips to make up their income.

I remember myself going to a restaurant in Florida about 30 years ago. The service was absolutely terrible so eventually we just paid the bill and left, but did not leave any tip. As we walked across the car park the waitress who had served us [if you could call it that] came rushing out of the restaurant in hot pursuit shouting “where’s the f*****g tip?”. We ran!

Actually the system is generally really rather unsatisfactory and can cause terrible arguments. I recall one instance where some British people were dining with some American friends in Spain, a country where tips are not left. The Americans true to their own background wanted to leave a very generous tip; the British were horrified and asked them not to on the grounds that if they did, the staff would get used to the idea and expect it every time. That was the end of a friendship!

Who was right?

How often have we been into restaurants and when the bill has come, there is a 10% or 15% “service charge” on the bottom of the bill? When you look back at the menu, yes there it is in tiny print which of course you did not notice on arrival because you were more interested in what you were going to eat.

But then there is a more macabre point – so a service or tip is collected, whether by being left in cash on the table or along with the rest of the bill. Who gets it? Secondly, who ought to get it?

The answer to the first question is that it could be just about anyone, not least the owner of the restaurant who of course would argue the continental point of “we pay our staff a good wage which includes a service charge”. Strangely staff seldom agree with that argument.

The answer to the second question requires some objectivity to be applied. Why is a tip being left at all? Is the tip voluntary or is this one of those “imposed” additional charges which are going to appear on the bill? The imposed charges must be really unfair because when you go to eat at a restaurant you expect to see a price for what you want and pay that price when the bill comes, not be told that you must pay some extra charge because you were served by a waiter or waitress! How else are you supposed to get your food? And what about where the tip is added but you are told you can deduct it? You don’t want to be seen as provocative or mean!

The truth is that a tip by its very nature and description is a voluntary payment made by a satisfied customer to reward service above and beyond. Of course you have to get service within your basic price but sometimes staff are really good at their jobs and you feel they deserve more.

But what about the “back office” personnel, like the chefs and so forth in the kitchen. They do not feel particularly pleased if a waiter picks up an extra £20 which he keeps because he served them a particularly nicely prepared meal and all he had to do was take it from the kitchen to the table.

But such is the fickle nature of the system which generally speaking is wholly uncontrolled. But that may be about to change in the UK. Conservative MP Dean Russell is bringing a private members bill to the House of Commons in which he wants to ensure that all tips are either retained by the person they are given to or pooled in accordance with a staff arrangement and employers would be prohibited from making deductions from the staff wages on the basis of their receipt of gratuities.

The only people likely to object to staff getting the tips are unscrupulous employers who pocket them themselves – and there are a lot. However, it is not really quite as simple as just letting the staff themselves have a free-for-all – you will end up with another layer of ill-feeling where staff who are not exposed to the customers may get nothing. If there is a pooling arrangement, then that has its own pitfalls – who is going to administer it? Who is going to decide just how much is distributed to each member of staff? When is this going to happen?

Should the employer collect the funds and place them in a separate account – often this is done now and it is called “tronc”. Should merit be recognised or should everyone just get their share pro rata?

We do not yet know the contents of Mr Russell’s bill or indeed whether there is time for him to be lobbied to look carefully at the competing options but what is surely important on this matter is that we do not leap from the frying pan into the fire and that fair provisions are adopted which will see the funds going into the right hands.

Adrian Leopard 29-6-21

Photo Dan Smedley

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