However the issue of where tips go and how much is kept by the restaurant is the subject of much confusion and controversy, and was in 2014 brought up in the House of Commons. Andrew Percy, the Conservative MP for Brigg and Goole who called for a change in the law that would allow restaurant staff to determine how tips are shared.
Recently casual dining chain pizza express has been in the spotlight, who will have recently been accused of taking a slice (pardon the pun) of gratuities left for staff. The British Hospitality Association has recently issued a “top tips for tipping” guide.
“Dining is all about customer experience and we leave the choice of tipping to the customer. No customer should feel obligated or pressured to provide a tip or accept an optional service charge” said Ufi Ibrahim, chief executive at the British Hospitality Association.
“Customers should not feel obligated to tip, especially when service is substandard. Remember that tipping fosters a service culture and it encourages people to work in the industry. Given that hospitality and tourism employs 3 million people in the UK, anything we do to support and encourage those 3 million to keep up the good work is beneficial” she added.
What’s the difference between service charges and tips?
An optional or discretionary service charge is a payment suggested by a restaurant or hotel to reward their employees for a great meal or experience. It sets out a specific amount you could choose to pay if you liked your experience – commonly 10 – 12%. This amount is included at end of the bill. As the customer, you are totally free to pay this recommended amount – or more or less than what’s been suggested.
A tip is where the restaurant or hotel hasn’t suggested a service charge. Then the customer decides what additional, optional payment to tip, over and above the amount set out on the bill.
Why not factor the tip into the overall cost of the meal?
If the customer is providing a tip, it is intended to go to the employees. For tax reasons, those employees will receive a greater portion of the sum if it’s provided as a tip or service charge rather than as part of the bill.
A tip or service charge directly benefits employees and restaurants:
- Optional service charges are not subject to VAT
- Employees or employees don’t need to pay National Insurance on any tips / service charge payments they receive
Additionally, if the price is included in the cost of menu items, it is no longer optional.
Cash or credit?
There are cash tips – where you pay employees directly the amount you want to.
It’s up to staff to disclose their tips to HMRC.
You usually have the option to add a non-cash tip to your credit card bill at the end of the night. This is paid to the restaurant. If the tip or service charge is non-cash then the restaurant may deduct variable handling charges for costs incurred such as credit card charges, banking charges, payroll etc. Any deductions should be made known to the restaurant staff.
Where does the money go?
Each hospitality establishment will have its own policy. Individual staff either keep their own tips or shares it out between waiting, front of house and the kitchen team.
If hospitality establishments have signed up to the BHA’s Fair Tips Code they should:
- Be able to tell you what is deducted as a handling charge
- How the remainder is shared amongst staff
- The process for distribution of tips amongst staff – e.g. via a staff representative etc.
What is a tronc?
A tronc is an arrangement set up by the employees to pool and distribute gratuities among staff. A tronc is operated by an appointed employee known as a troncmaster who is responsible for deducting pay-as-you-earn taxes.
What if you aren’t satisfied?
If you aren’t satisfied, a good hospitality establishment will appreciate you letting them know what went wrong so that they have a chance to put it right.
Top tips for tipping
- Check out websites or ask staff about their tipping policy before you pay.
- Those that are signed up to the British Hospitality Association’s Fair Tips Code will display this information. You’ll know how the money is divided up once you’ve handed it over.
- If you’re really happy, a good tip is 12-15% of the bill.
- If you’re satisfied a normal tip would be 10-12%.
- If you’re unhappy, then say why you aren’t happy so that the restaurant can put it right next time.