Tipping Wait Staff and How Employers Handle Tips (Here and In The US)

We have written before about the history of tipping and gratuities , and while it is something as simple as just leaving a small amount of money as a token and a thank you for good service, lately it seems to have grown into a much more complicated matter.

We have written before about the history of tipping and gratuities, and while it is something as simple as just leaving a small amount of money as a token and a thank you for good service, lately it seems to have grown into a much more complicated matter.

More so that TGIF employees are striking, again, over how their tips are handled by the employer, and as mentioned, they are striking again as this is not the first time. It is the fifth or more time various restaurants across the country have had their employees go on strike.

Tipping Wait Staff and How Employers Handle Tips (Here and In The US)

The workers that are striking are members of Unite, which is the largest union in Britain, are striking over how tips are factored into their wages, which can leave some workers £250 worse off each month.

Unite’s National Officer Rhys McCarthy stated, “Despite facing intense pressure from the company not to strike, our brave members in these three restaurants are taking a stand to stop the bad practice across the entire business.”

It takes immense courage to take on a hedge-funded owed, multi-million company like TGI Fridays but the support that our members have had from the public has been great. Customers do not appreciate the deception. They left their tips for the staff and that is where they should go.”

“This is a company that thinks it can just shrug off our members’ concerns and ignore approaches from the Advisory, Conciliation and Arbitration service Acas with no thought as to the hardship it is causing.”

The waiting staff are now around £60 a week worse off, which is a lot of money when your hourly pay rate is £7.83 or just £5.90 for those aged under 20. And it is a disgraceful act given that the CEO has recently been awarded a pay boost of £105,420.”

We urge TGI Friday’s to work with us to find a better way forward. We are ready to talk to find a sensible solution to this dispute but TGI Friday’s must recognise the distress and hardship its decision has caused, and start rebuilding trust.”

For many workers in the service industry that receive tips, and it is not just in restaurants, but hotel staff and housekeeping, valets, bar staff, etc, anyone in a service related industry/job.

Here in the UK, staff are paid the national minimum wage, according the law, and some may receive the “living wage”, but living on this wage can be very difficult.

In other countries, such as America, staff are paid under the minimum wage, and it is expected that their tips will “top-up” or raise their hourly rates to above the minimum wage, and in some instances raise it up a lot.

Tipping Wait Staff and How Employers Handle Tips (Here and In The US)

Of course tipping etiquette in America and other countries is different than here in the UK. In the US tips begin at 15% of the total bill, and 20% has more and more become the norm.

Which means if we do the math, on a $50 restaurant bill, a tip of 20% would be $10.

How Does Keeping Tips Here in the UK Work?

As to how employees may keep tips, and how it all works comes down to two (2) main factors:

* How the tips are paid, cash or on a card

* How employers handle tips

In some pubs and restaurants, cash tips to staff are theirs to keep and do with as they may. Such as declaring them as income to HMRC for tax purposes.

Tipping Wait Staff and How Employers Handle Tips (Here and In The US)

The employee who receives the tips may treat them as cash-in-hand, and not declare them for tax purposes. And while HMRC may figure and guess someone in this job position may receive some tips, it is very difficult to prove, and more difficult to prove an amount.

Unlike in America, the IRS, our HMRC here, assumes every worker in a restaurant’s wait staff makes a certain percentage of their total bill as a tip, and taxes them on this amount.

If a customer does not tip, or tips below this percentage, the waiter or staff member can lose money.

There are some rules employers must follow regarding tips, and one is they cannot use the tips to “top-up” an employees wages to that of the national minimum wage. The tips are in addition to the worker’s wages.

The real issue is that there are no hard and set rules n how employers should handle tips, there is a “Code of Best Practice”, but it is more guidelines.

Tipping Wait Staff and How Employers Handle Tips (Here and In The US)

As to how employers handle tips, it is usually in one of two (2) ways:

* The tips are given individually to employees

* The tips are pooled in a “tip jug” and dispersed to employees

Of course if a tip is in cash, as to if it makes it to the tip jug is anyone’s guess.

Tips pooled together in a tip jugs, are given to staff either weekly, monthly, or in accord with that employer’s rules.

As mentioned, cash tips are difficult to monitor for tax purposes, but tips paid by card are monitored and tax is to be withheld on them.

Tipping does not need to be a complicated procedure, either from a worker’s view or a customer’s view. The main thing is the tips have to be handled fairly by the employer if pooled, and cannot be used to make-up any difference between a wage less than the national minimum, and equalling the national minimum wage. Tips are in addition to the minimum wage.

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