Gratuity

Leaving some currency on a restaurant table is a common way of giving a tip to the serving staff.

A tip (also called a gratuity) is a voluntary extra payment made to certain service sector workers in addition to the advertised price of the transaction. Such payments and their size are a matter of social custom. Tipping varies among cultures and by service industry. Though by definition a tip is never legally required, and its amount is at the discretion of the patron being served, in some circumstances failing to give an adequate tip when one is expected may be considered very miserly, a violation of etiquette, or unethical. In some other cultures or situations, giving a tip is not expected and offering one would be considered condescending or demeaning. In some circumstances, such as with government workers, tipping is illegal.

Etymology

There are common inaccurate claims that "tip" (or "tips") is an acronym for a phrase such as "To Insure Prompt Service", "To Insure Proper Service", "To Improve Performance", or "To Insure Promptness." These false backronyms contradict the verifiable etymology, as follows.

According to the Oxford English Dictionary, the word tip originated as a slang term, and its etymology is unclear. The term in the sense of "to give a gratuity" first appeared in the 18th century. It derived from an earlier sense of tip, meaning "to give; to hand, pass", which originated in the rogues' cant in the 17th century. This sense may have derived from the 16th-century tip meaning "to strike or hit smartly but lightly" (which may have derived from the Low German tippen, "to tap"), but this derivation is "very uncertain".

Circumstances of tipping

In countries where tipping is expected (the United States for example), complicated unofficial standards and customs have developed over the exact percentage to tip, and what should and should not be included in this calculation. In other cultures where tipping exists it is more flexible and no specific assumptions of the tip amount exist.

Some believe the custom of tipping helps to improve service, as workers may receive higher tips from satisfied customers. In the United States, some employers pay workers with the expectation that tips will make up the difference. The practice of tipping is controversial, with numerous criticisms. Some have criticized the inherent "social awkwardness" in transactions that involve tipping, the inconsistency of tipping for some services but not similar ones, and the irrationality of basing tips on price, rather than the amount and quality of service (a customer pays a larger tip to a server bringing him a lobster rather than a hamburger, for example).

A number of economists have suggested that tipping is economically inefficient. Ian Ayres, Fredrick E. Vars & Nasser Zakariya published a paper suggesting that tipping contributed to racial prejudice, since ethnic minorities would often be less able to pay a large tip. Another paper by Yoram Margalioth of Tel Aviv University argued that there was a negative externality associated with tipping, and that the practice facilitated tax evasion. Two other American studies have contributed to the thesis that tipping is racially discriminatory, finding that ethnic minority servers and taxicab drivers received lower tips on average than their white counterparts. In the study of the servers, an attempt by the author to isolate other possible contributing factors, such as poor service, found that "After controlling for these other variables … the server race effect is comparable across customer race."

Others have criticised the belief that waiters know that they won't get paid if they don't do a good job, with one study from a Cornell University professor concluding that "consumers' assessments of the quality of service correlate weakly to the amount they tip," relying more on superficial factors such as the attractiveness of the server or how large the bill is.

Tipping is not expected when a fee is explicitly charged for the service. For example, a service charge for all patrons that is automatically added to the tab with no tipping is very common in Brazil, but it's never mandatory to pay this charge. Bribery and corruption are sometimes disguised as tipping. In some places, police officers and other civil servants openly solicit tips, gifts and dubious fees using a variety of local euphemisms. For example, a traffic policeman in Mexico might ask a commuter to buy him a "refresco" (soft drink), while a Nigerian officer might expect "a little something for the weekend."

Tipping by region

Asia

China

In China, traditionally there is no tipping (except Hong Kong and Macau, both semi-westernized areas). However, hotels that routinely serve foreign tourists may allow tipping. An example would be tour guides and associated drivers.

Israel

In Israel, tipping in restaurants is expected. Typical tip is 10%-12%.

Singapore

In Singapore, tipping is not considered the norm, though bars and restaurants may add a 10% service charge. It's actually prohibited at the airport and discouraged at hotels and restaurants where a 10% service charge is included in the bill.

Tipping is not the norm in taxis, as congestion or ERP charges are often already included in the final fare. All taxis must advertise a hotline to call if the customer feels dissatisfied.

South Korea

In South Korea, tipping is not customary at restaurants, hotels or for taxi service. While dining at restaurants, customers may sometimes receive gratuity from the owner or server in the form of complimentary food or drinks as a sign of generosity or to reward customer loyalty. Colloquially, this is known as "service" and even in this circumstance tipping is not a customary practice.

Taiwan

In Taiwan tipping is rare except when a customer uses a porter at an airport, which is usually 50 New Taiwan Dollars per luggage, or wants to show appreciation for exceptional service. Some restaurants and hotels already add 10% service charges.

Australia

Tipping is not a traditional practice in Australia, although in recent times it has become more common in restaurants and hotels (particularly in larger cities) possibly due to more common exposure to American practices. Even in these places, it tends to be reserved for instances of particularly good service. Tipping staff of any other kind of business is very unusual. Casinos in Australia generally prohibit tipping of gaming staff, as it is considered bribery. (For example, in the state of Tasmania, the Gaming Control Act 1993 states in section 56 (4): "it is a condition of every special employee's licence that the special employee must not solicit or accept any gratuity, consideration or other benefit from a patron in a gaming area.")

Central and South America

Argentina

Tipping is common in restaurants and bars, usually around 10% of the bill when happy with the service received. Leaving no tip when feeling unsatisfied is not an uncommon gesture, and it's interpreted as such. Many restaurants include a small service charge or cubierto of fixed value (typically no more than 5 Argentine pesos per customer), but even so a tip is expected. Tips are also usually given for food delivery services and luggage carrying and loading/unloading from buses. Taxicab drivers are not tipped. {{citation}}: Empty citation (help)

Another local custom is to tip the ushers in theaters and opera houses when they're also in charge of handing out the programmes (one may request one without tipping, at the risk of being considered cheap).

Bolivia

Service charges are included with the bill. Still, a small tip, around 5% or so, is sometimes given, and is considered polite.

Brazil

Optional service charges of 10% are included at some restaurant bills, and additional tips are very rare. While tips can sometimes be given for some services, such as taxis, delivery or tourism, tips are very uncommon.

Paraguay

Service charges are included with the bill, and tipping is uncommon.

Europe

Germany

Tips in Germany are commonplace in restaurants and bars, including drinks (not fast food), referred to as Trinkgeld. One is expected to leave a 5%-10% tip.

Iceland

In Iceland tipping (þjórfé, lit. "drink money") is never expected since service charges are included in the bill.

Ireland

Although it has been cited that tipping for taxis is typical, it is not common in practice. Commonly people will round-up the fare to the nearest note to avoid fumbling for small change(for example, hand over €5.00 for a fare of €4.50)

In Ireland it is not customary to tip a percentage of the total bill, a few small coins is generally considered quite polite. Like most of Europe it is common to round up to the nearest note, (i.e. paying €30 for a bill of €26).

Italy

Tips (la mancia) are not customary in Italy, and used only if a special service is given or to thank for a high quality service. Almost all restaurants (with the notable exception of Rome) have a price for the service (called coperto) and waiters do not expect a tip, but they will not refuse it, especially if given by foreign customers. In cafés, bars, and pubs it's however not uncommon, on paying the bill, to leave the change saying to the waiter or to the cashier "tenga il resto" ("keep the change"). Recently tip jars near the cash register are becoming widespread, however in public restrooms is often forbidden. Leaving the change is also quite common with taxi drivers. When using a credit card, it is not possible to add manually an amount to the bill, so it is possible to leave some notes as a tip. Christmas and holiday tips are often given to postmen and also to family doctors.

Romania

The tip (bacşiş) is usually 10% of the bill and is expected in restaurants, coffee shops, and taxis.

Slovenia

Tipping is not customary in Slovenia and traditionally it is almost never done. In recent times, however, areas visited by large amounts of tourists have begun to accept tips, which are welcomed but not obligatory. In such cases, the amount is typically 10 percent, but may range higher in exceptional circumstances.

Spain

Tipping ("propina") is not customary and not generally considered mandatory in Spain. In restaurants the amount of the tip, if any, depends mainly on the economic status of the customer and on the kind of locale, higher percentages being expected in upscale restaurants. In bars and small restaurants, Spaniards sometimes leave as a tip the small change left in their plate after paying a bill. Outside the restaurant business, some service providers, such as taxicab drivers, hairdressers and hotel personnel may expect a tipping an upscale setting. In 2007 the Minister of Economy Pedro Solbes put the blame on the excessive tipping for the increase of the inflation.

Switzerland

Tipping is expected, though not mandatory in Switzerland, but a tip of 10% would be considered "weird". For small amounts, round up to the next franc, in a restaurant a few francs at max (1-1.5%).

In most restaurants and bars, "service" as it's called, is included on the bill. Anything left in addition is a compliment for great service, but not expected. {{citation}}: Empty citation (help)

Turkey

In Turkey, tipping, or bahşiş (lit. gift, from Persian word بخشش) is usually optional and not customary in many places. However, a tip of 5-10% is expected in restaurants, which is usually paid by "leaving the change". Cab drivers usually don't expect to be tipped, though, rounding the fare upward would be appreciated. In hotels, a small change as a tip would be enough make most porters happy.

United Kingdom

It is not customary to tip for service at the bar in a U.K. pub. However bars (as distinct from pubs, for example cocktail bars) will often deliver change on a plate to a customer being served at the bar and expect some or all of it to be left as a tip. Tips are usual for table service in either pubs or bars.

It is a legal requirement to post prices including any taxes and other charges. Additional service charges at restaurants are unusual, although more common in London and other large cities than regional areas. Where these occur, it is legal to refuse to pay the service charge if you believe the service was inadequate.

Taxation in the U.K.

A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade. The person who distributes monies from the tronc is known as the troncmaster. When a tronc exists in the UK, responsibility for operating PAYE on the distribution may lie with the troncmaster rather than the employer. (The word 'tronc' has its origins in the French for collecting box.) In June 2008, the Employment Appeals Tribunal ruled that income from a tronc cannot be counted when assessing whether a wage or salary meets the national minimum wage (see Revenue and Customs Commissioners v Annabel’s (Berkeley Square) Ltd [2009] EWCA Civ 361, [2009] ICR 1123)

North America

Canada

Tipping in Canada is similar to that in the United States due to the close cultural nature of the two countries but tends to be somewhat lower due to higher minimum wages and lower employee cost (e.g. universal medical care). Restaurant wait staff in Canada typically receive about 15% on the before-tax total, although anywhere from 10-20% is within the average range.

Quebec and Ontario allow employers to pay lower minimum wages to workers who would reasonably be expected to be receiving tips. In Ontario, the minimum wage is $10.25 per hour, with exceptions for students under 18 years old and employed for not more than 28 hours a week, who are paid $9.60 per hour; and both liquor and restaurant servers, who are paid $8.90 per hour. On April 13, 2010, the Toronto Star reported since 2009, it has become common for restaurant servers to give part of their tips to the business they work for.

Workers who receive tips are legally required to report the income to the Canada Revenue Agency and pay income tax on it. However, many workers have been known to report no income from tips at all or, perhaps more commonly, to "lowball" the figure. In response, the CRA has vowed that it will closely check the tax returns of individuals that it would reasonably expect to be receiving tips to ensure that the tips are reported, and that the amount reported on the returns is realistic.

United States

Tipping is a widely practiced social custom in the United States. Standards vary, but generally, gratuities are given for services rendered in the restaurant, bar, and taxi industries. For most of the 20th century it was considered inappropriate for the owner of an establishment to accept any tips, and while this is still considered the standard etiquette rule, the practice has mostly vanished as tipping has become ubiquitous for certain types of services. Tipping is done only by the host of a party. Guests should never leave tips as this breaches the host's hospitality. This etiquette applies to bar service at weddings and any other event where one is a guest as well. The host should provide appropriate tips to workers at the end of an event.

Laws in the states of Alaska, California, Minnesota, Montana, Nevada, Oregon, and Washington require all employees to be paid at least minimum wage. However, it is still customary to give standard tips in those places. Elsewhere, wage laws allow employers to credit an amount of earned tips against the minimum wage, allowing them to pay tipped employees less than minimum wage. As of September 2009, this reduction can be as low as $1.45 per hour in West Virginia, or as high as 100% in Virginia, reducing potential wages to $5.80 or $0 per hour, respectively. Which employees may have their wages reduced varies as well. The Fair Labor Standards Act defines a tipped employee as anyone receiving more than $30 per month in tips, although several states set a lower $20 per month threshold.

Restaurants

Tipping is customary in restaurants offering traditional table service. While the amount of a tip is ultimately at the discretion of the patron, the customary tip until the 1980s was from 15% of the total bill before tax, for good to excellent service, and since then has risen to 20% before tax. Tipping percentages may fall when the economy is poor. Waiters, on average, fail to report at least 40% of their tips according to the IRS.

When a server has not adequately addressed issues a customer has with service, the patron may choose to speak with management to have the problems corrected before considering reducing the tip. In extreme cases of inferior service, the patron may choose not to leave a tip. Though not considered a standard business practice, some dissatisfied customers go so far as to leave a very small tip, such as one penny, as a personal insult.

For large groups, such as six or more, many restaurants add a standard predetermined service charge (~18%) in lieu of the gratuity. Reputable restaurants post their policy on a sign or the menu, or require servers to inform their patrons of such charges before they order. This charge can be verified by the customer on the bill to avoid tipping in addition to the service charge. A service charge is also taxed by the IRS. Customers have a right to negotiate, alter, or refuse charges which were hidden until the bill arrived. A customer may choose to include an extra tip for the server over and above the service charge, or, if service to a large party is poor, to negotiate an alternate service charge with management.

While some advocate increasing tipping for the benefit of employees who lack direct customer contact, such as kitchen, bar, and bus staff, the funds may or may not be used for that purpose. Some service worker advocacy groups point out that some restaurants have agreements among the staff requiring servers to "tip out," i.e. give a portion of their tips to members of the support staff, while anti-tipping groups point out that some establishments already allocate a percent of the bill (such as 3%) directly to the support staff from the receipts rather than from tips.

Many traditional restaurants offer carry-out ("pick-up," "take-out, or "curbside") service, and standards for tipping for such services vary. Tipping is not traditionally required for non-table services. Some advocate optional tipping in the case of exceptional service or difficult orders, while those working in the industry often promote 5-15% as appropriate.

Tipping at fast food restaurants and coffeehouses that do not offer table service is not necessary, despite the common proliferation of tip jars, which are considered inappropriate by many. Such tips may be divided amongst the on-shift staff (except for salaried management), whether or not such staff directly contributed to a patron's order.

Taxicabs

Most U.S. guides recommend 15% of the fare, more for extra services or heavy luggage.

Government employees

Under federal law it is considered bribery to tip federal government employees. However, they are permitted to receive unsolicited non-monetary gifts less than or equal to $20.00.

Other

Many retailers forbid their employees to accept tips, although this is illegal in some states, such as California, where the law states that tips are the property of to whom they are given, and employers may not require employees to refuse tips or share their tips with anyone.

Taxation

In some jurisdictions, tipped workers qualify for a lower statutory minimum wage from the employer, and therefore may supplement deficient pay with tips. For example, the United States Internal Revenue Service (IRS) requires restaurant employers to ensure that the total tip income (both cash and tips added to credit or debit card receipts) reported to them during any pay period is at least eight percent of their total receipts for that period. If the reported total is below eight percent, employers must allocate as income the difference between the actual tip income reported and eight percent of gross receipts. Legally, tips should be reported as income for tax purposes by the recipient. Form 4070 is provided by the IRS for the daily tracking of tip income by employees and the reporting of it to employers by the 10th of the month for the previous month's gratuities received.

External links

• How2Tip A service industry guide for Las Vegas
• The Trouble with Tipping
• The Straight Dope: What is the origin of tipping?
• Make Better Tips
• The New Yorker: The controversial end of tipping in one N.Y. restaurant
• Tipping in Spain
• Ask Yahoo!: How did the practice of tipping begin?
• San Diego restaurant abandons accepting tips
• Social rebels at TippingSucks.com attempt to overturn convention