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 is a serious faux pas, and 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 at best odd and at worst condescending or demeaning. In some circumstances, such as with U.S. government workers, receiving of tips is illegal. Some restaurants require a tip, euphemistically called a gratuity, if many patrons are present at a table.

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", "To Inspire Promptness" 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

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.

In countries where tipping is the norm, such as 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."

A study from a Cornell University professor concluded 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 the amount of the bill.

Tipping may not be expected when a fee is explicitly charged for the service. For example, a service charge is often added to bills in restaurant and similar establishments. It may be described as "optional", but is very often considered by the establishment and diners as almost obligatory. A tip is expected on top, sometimes by not emphasising that a service charge has been levied.

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.

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 and bars is expected. In many restaurants there are also "security charges" that are not compulsory, but are added onto the bill. This payment is supposed to cover the cost of hiring an armed guard at the bar in the remote chance of attack.

Japan

In Japan, tipping is not a part of the culture. Japanese people are uncomfortable with being tipped, and are likely to be confused, amused or possibly even offended if tipped.

Singapore

In Singapore, tipping is not considered the norm, though bars and restaurants may add a 10% service charge. It is 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; although congestion or ERP charges are often included in the final fare. All taxis must advertise a hotline to call if the customer is dissatisfied.

South Korea

In South Korea, tipping is not customary at restaurants, hotels or for taxi service. When dining at restaurants, customers may sometimes receive complimentary food or drinks from the owner or server; colloquially, this is known as "service". Even in this circumstance tipping is not customary. Some foreign food restaurants and hotels add a 10% service charge

Taiwan

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

Turkey

In Turkey, tipping, or bahşiş (lit. gift, from Persian word بخشش, often rendered in English as "baksheesh") 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 do not expect to be tipped, though passengers may round up the fare. A tip of small change may be made to a hotel porter.

Philippines

In the Philippines tipping is becoming more common especially in service-oriented places (spa, salon). However, in some restaurants and hotels a "service charge" of 8 to 12% is included in the bill; customers sometimes add a further "tip".

Australia

Tipping is not the norm in Australia, although in recent times it has become more common in restaurants and hotels, particularly in larger cities; even there it tends to be reserved to reward particularly good service. Tipping staff of any other kind of business is very unusual. Casinos in Australia—and some other places—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."

New Zealand

Tipping is not a traditional practice in New Zealand. Although relatively rare and never expected where tipping does occur it is usually to reward a level of service that is significantly in excess of the customer's expectations, or as an unsolicited reward for a voluntary act of service. The tip may take the form of money, a gift or some other gesture designed to demonstrate gratitude.

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 dissatisfied is not uncommon, and the reason is understood. Many restaurants also levy a small fixed cover charge (cubierto; typically no more than 5 Argentine pesos per person). Tips are also usually given for food delivery services and luggage carrying and loading/unloading from buses. Taxi drivers are not tipped.

It is customary to tip the ushers in theaters and opera houses if they hand out programmes.

Bolivia

Service charges are included with the bill. A tip of 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

Albania

Tipping (bakshish) in Albania is very much expected almost wherever. In recent times it has become more common as many foreigners and Albanians living abroad visit Albania. Leaving a tip of around 10% of the bill is customary in restaurants; even porters, guides and chauffeurs expect tips. If you don’t want to leave money for porters, bellhops and the like, duty free alcohol is often very welcome- but this must be doled out with discretion, as some people may actually find it offensive. [2]

Belgium

Tips (fooi) are not expected in Belgium. When tipping in pubs/restaurant, it will mostly be a simple round up to the nearest integer.

Croatia

Tips (napojnica, manča, tip) are expected mostly in restaurants, but not mandatory. Restaurant tip is around 10% (or more if you are really satisfied with overall dining experience). In clubs or cafe bars is common to "round up the bill". It's not common to tip taxi drivers or hairdressers (but it's up to you). In tourist country like Croatia, tip can "open a lot of doors" and surely you will leave good impression which will be recognised on your next visit.

Denmark

Tips (drikkepenge, lit. "drinking money") are not required in Denmark since service charges are automatically added to the bill. Tipping for outstanding service is a matter of choice, but is not expected.

Finland

Tips are not expected in Finland, but leaving a tip is considered a kind gesture.

France

Tips (Pourboire) are not expected in France since service charges are included in the bill. However, French people usually leave the small change left after paying the bill or one or two euros if they were satisfied with the service quality.

Germany and Austria

Tips of 5 to 10% (Trinkgeld, lit. "drink money") in Germany are commonplace, but not mandatory, in restaurants and bars, sometimes with the comment 'es stimmt so' ('keep the change'). Or the total price including the tip is commented with; thus a price might be 10,50 € and a customer might, rather generously but not unusually, say 'zwölf' ('twelve'), pay 20 € and still get 8 € back. It is uncommon to give a tip when only one item (e.g. a glass of beer) has been consumed. Tipping is also common, but by no means universal, for the following services: hairdressing, taxis, porterage at hotels. In public restrooms with attendants it is considered impolite not to leave a tip. Tips are free from taxation.

Greece

In Greece tipping ("Φιλοδώρημα" , transl. filodórima, or the loanword "πουρμπουάρ" from French pourboire) is commonplace, but not mandatory. Usually an amount on top of the small change left after paying the bill is left on the table in restaurants or bars. There is no set formula as to the proper amount, but for a large bill the tip is usually larger as well. The setting is also a factor; for instance, dining at an upscale establishment would merit more consideration to the tip than simply having coffee at a café.

Iceland

In Iceland tipping (þjórfé, lit. "drink money") is not expected since a gratuity is already included in the bill. However, a tip of up about 10% is appreciated in a nicer restaurant for great service. At less expensive places such as pizza places, burger joints or hot dog stands, tipping is not expected. Icelanders themselves do not practice the tipping custom, but are familiar with it.

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 restaurants, unless a service charge is included in the bill, it is customary to leave a tip of 12.5%. In pubs, a tip is not generally left unless drinks are brought to the table by lounge staff, in which case tips are not obligatory, but are often given, at least by requesting the staff to keep some or all of the change.

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 coins as a tip.

The Netherlands

Tipping is not mandatory or customary. Service is included in the given prices and rates, but leaving a tip is considered a kind gesture.

Norway

Tipping is semi-expected in Norway and the tip is usually 10% of the bill. However, price rises in the 21st century have reduced the incidence of tipping, with the exception of restaurants (although there is also a service charge). Elsewhere than in restaurants and bars (e.g. taxis) it is usual to leave the change.

Romania

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

Slovenia

Tipping is becoming a custom in Slovenia. Most tourists think that it is charged in the bill, but it never is. Recently, areas visited by a large amount of tourists have begun to accept tips at around 10 - 20%, which are more than welcome.

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 in 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 not expected, although it is common for a customer to round-up the bill to the nearest franc for a small amount, or to add a couple of francs (certainly not 10%) to a larger bill. 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.

United Kingdom

It is not customary to tip for service at pubs. 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.

Tips of 10% are common in restaurants but not expected. It is a legal requirement to include any taxes and other obligatory charges in the price. Service charges, which may be discretionary (although it is very unusual to refuse to pay) or mandatory, are sometimes levied, more often in London and other large cities than regional areas. It is legal to refuse to pay a mandatory service charge if the service was considered inadequate.

Tipping for other services such as taxis and hairdressers is not expected, but tips are sometimes given to reward particularly good service. Although in some large cities it is customary to tip both taxi drivers and hairdressers/barbers.

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 rates in Canada are similar to those in the neighbouring United States.

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.

Traditionally, owners of businesses and buffet staff are not tipped.

Workers who receive tips are legally required to report the income to the Canada Revenue Agency and pay income tax on it. In Quebec, the provincial government automatically taxes servers 8% of their sales whether a gratuity was received or not. In other provinces, 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 said that it will closely check the tax returns of individuals who would reasonably be expected to be receiving tips to ensure that the tips are reported realistically.

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. 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.

Federal law requires that employees report 100% of tip income on their tax return, excluding any given months where total tip income was less than $20.

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 10-15% of the total bill before tax, for good to excellent service, and since then has risen to 15-20% 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.

An IRS audit triggered by major discrepancy between employee reported tip and credit card slips maintained by the business, it was discovered that employees of Fior D'Italia in San Francisco was significantly under-reporting their tip income. The average tip amount as discovered by IRS through calculating the average of credit card slips for year 1991 and 1992 were 14.4 and 14.29% respectively.

In a 2003 auditing conducted in a research report under advise of faculty member Ron Worsham at Brigham Young University, found that the data collected from sample restaurants for report had an average tip percentage ranged from 13.57 to 14.69% between 1999-2002.

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.

In certain situations, the restaurant may assess a gratuity to the bill automatically without customer input, which is called an "autograt." The most frequent reason for this is for large groups, such as six or more, which many restaurants as a matter of policy add a standard predetermined amount (~18%) that may be labeled as a gratuity or as a "service charge" in lieu of the gratuity. In less frequent cases, an autograt may be placed on every customer's bill. 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. Regardless of whether it is labeled a "service charge," it is still taxed by the IRS.

Legal cases have established that customers have a right to negotiate, alter, or refuse such automatic charges entirely, even if the policy is written on the menu. A customer may choose to include an extra tip for the server over and above the service charge, or, if service is poor, to negotiate an alternate service charge with management.

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 which are less than or equal to $20.00 in value.

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.

See also

• Mandatory tipping

External links

• 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