Gratuity

For other uses, see Gratuity (disambiguation).

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

A tip is a payment to certain service sector workers beyond the advertised price. The amount of a tip is typically computed as a percent of the transaction minus taxes. These 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 person being served, in some circumstances failing to give an adequate tip when one is expected would 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.

Etymology

The word originates from the 16th century verb tip, which meant "to give unexpectedly", and was derived from the German word tippen, meaning "to tap." The modern German version would instead be Trinkgeld, literally meaning "Drink Gold", or "Money to Drink" Modern German would instead be for "tap", Hahn, "to tap", Klopfen.

The notion of a stock tip is from the same slang, and the expression hot tip, as in a sure winner in a horse race, also comes from the act of tapping. In the old days, during card games, gamblers would have an accomplice in the room. This accomplice would signal the player regarding the contents of an opponent's hand by "tipping the wink" - that is, by "tapping" out a code with his eyelid. The Oxford English Dictionary states that tip is derived from the English thieves (which may be taken to mean "gambler") slang word tip, meaning "to pass from one to another" (cf. "to give unexpectedly.")

The word "tip" is often inaccurately claimed to be an acronym for terms such as "to insure prompt service", "to insure proper service", "to improve performance", and "to insure promptness". However, this etymology contradicts the Oxford English Dictionary and is probably an example of a backronym.

Some claim the origin for this term is a concept from Judaism, in that it was a chiyuv (obligation) for a seller to "tip the scales" in favor of the customer. Maimonides explains the verse from Deuteronomy "A perfect and just weight shalt thou have", that the seller should give the buyer a little more than what he paid for, "Noten lo girumin" (Gives him extra / a tip).[5] For example, if your customer has asked for three pounds of onions, you should measure out the three pounds plus one extra onion, tipping the scale in his favor.

Circumstances of tipping

In countries where tipping is the rule (for example United States), complicated social rules and etiquette 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 establishments pool tips and divide them to include employees who lack customer contact. At some restaurants, agreements among the staff require the servers to tip out members of the support staff (kitchen, bartender, and busser) at the end of their shift;; this means that servers pay a certain fixed percentage of their sales (most often a portion less than 15 percent of total sales) to the other staff. Thus when a patron leaves a small tip, it results in the server having to receive less from the tipping pool than other staff.

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 the rule in Brazil. 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.".

Tax and labor-law treatment

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 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. Therefore the IRS is implicitly assuming the average tip to be eight percent.

Legally, tips should be reported as income for tax purposes by the recipient,

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.

Tipping by Continent

Asia

Israel

Tipping in Israel is uncommon in restaurants and hotels because a service charge, typically 10 percent of the bill, is often added to the bill automatically.

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. Many restaurants and hotels already add 10% service charges. Taxi drivers may not wilfully refuse to make change or ask for tips.

Australia

Australia and New Zealand

In Australia and New Zealand, according to a 2005 Sydney Morning Herald article, "Tips are not expected but are appreciated, especially in the 10 per cent range."

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."

Tipping for pizza delivery in Australia is rare and not customary, and hourly wages for deliverers are considered relatively high. Prices for delivery orders are typically higher than for carryout orders, and "free delivery" cannot be advertised if carryout pricing is lower.

Europe

In general, in the European Union and other parts of Europe, tipping is not essential but it is customary, although there are regional variations.

Denmark and Sweden

The service charge is included in the bill, but a small tip may be given as a sign of approval of the service.

Iceland

In Iceland tipping (þjórfé, lit. "drink money") is rare. Service charges are generally included in the bill.

Slovenia

Tipping is not customary in Slovenia and traditionally it is almost never done. In recent times, however, high-tourist areas 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 is not customary in Spain and it is almost never done among natives. In fact, the Mexican Spanish term propina actually connotes bribery, not respect, as in European Spanish. While in bars and small restaurants, Spaniards only leave as a tip the small change they receive in a plate after paying the bill. In more sophisticated restaurants it is customary to leave between 5% and 10%. A 2005 Sydney Morning Herald article suggested to "Tip a few per cent extra in addition to the automatic tip added to the bill."

North America

Canada

Tipping in Canada is very similar to that in the United States due to the close cultural nature of the two countries. For example, while tipping for waiters in the United States is 15-20% for good service, waiters in Canada also receive 15-20% for good service. 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 $8.00 per hour, with the exceptions for: Students under 18 years old and employed for not more than 28 hours a week, who are paid $7.25 per hour; and Liquor servers, who are paid $6.95 per hour.

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 not report any 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 based on a percentage is customarily computed on the bill's total not including tax. The practice of tipping varies from place to place. In general, tipping is practiced when services are rendered personally by an employee in a restaurant, bar, hotel, and/or taxi industries.

At a restaurant

Tipping is customary in restaurants having traditional table service. As tipped employers generally qualify for a lower statutory minimum wage from the employer, tips constitute the majority of the income for tipped workers such as wait staff. The standard tip for a restaurant meal in the United States is 15 percent of the bill, and up to 20% at more expensive establishments.

Many restaurants include a tip at 15-18% or more on the bill for groups of 6 or more guests. A recent trend has developed, with a few restaurants themselves charging an automatic, 20% service charge (after tax).

Tipping for traditional table service restaurants offering take-out and curbside service is also optional, although a few sources suggest a small tip (e.g. 5%) if the order was unusually difficult.

Some coffee shops or establishments without table service leave a countertop tip jar by the cash register, but tipping is not expected as it would be for table service.

Servers usually "tip out" portions of their tip receipts to support staff like bussers and bartenders. Bartenders usually are also tipped by the patrons ordering drinks at the bar.

At a bar

When purchasing alcoholic beverages at a bar it is customary to tip $1-2 per drink, or in the same 15% to 20% range as at a restaurant.

Other

Many reputable retailers forbid their employees to accept tips (although this is illegal in some states, such as California, due to the fact that state law states "tips are the property of whom they are given, and employers are not allowed to require employees to refuse, give, or share their tips with anyone".

South America

Paraguay

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