Couple and Waitress in Cafe — Are they being served? Customers may reward good waiting staff service but not all the money goes directly to the server. Photograph: Alamy Photograph: /Alamy

How much should I tip? The etiquette of service charges and gratuities

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Confused by tips, service charges, cover charge and gratuities? You’re not alone. Many customers are still uncertain how much to leave and who the money goes to. Kara Gammell finds out

Unless you’re in the habit of tipping by slickly sliding a bank note into your waiter’s hand, the chances are that your cash does not go directly to your server. Surprised? You’re not the only one.

The issue of where tips go and how much is kept by the restaurant has long confused diners, and has recently been brought up in the House of Commons. Andrew Percy, the Conservative MP for Brigg and Goole, has called for a change in the law that would allow restaurant staff to determine how tips are shared.

Percy accused some restaurant firms of ignoring a voluntary code introduced in 2009 encouraging them to make their tipping policies clear. He warned that, as a result, customers were confused about where their money was going when they decided to leave a tip or pay an optional service charge.

“This is unfair to the worker but also to the customer who, when leaving a tip, probably expected it to go to the staff who had served them or prepared their food,” he wrote on his website. “I have been horrified by examples provided to me from workers who report losing as much as 50% of their tips to their employers.”

Andrew Percy, MP for Brigg and Goole, has drawn attention to confusion over tipping. Photograph: Sean Spencer/Hul News & Pictures

Figures back up Percy’s claims. According to a survey published in the Caterer, the hospitality industry trade magazine, the average amount in gratuities that front-of-house restaurant staff take home at the end of a shift is £19.50.

This will no doubt shock many diners who have left significantly more on the table after their last meal out – but the tipping systems in place at most UK restaurants can be complex.

For a start, are you even sure what a tip is? According to the Department for Business, Innovation and Skills (BIS), which drew up the voluntary code on tips, diners are often confused by the distinction between service charges, tips, gratuities and cover charges. A service charge, according to the code, is an amount added to your bill before it is given to you and is almost always based on a percentage of the bill. If it is “discretionary” or “suggested” you are free to make the payment or not.

A tip, or gratuity, on the other hand is a voluntary payment given over and above the amount of the bill (and, believe it or not, any service charge) as a “personal reward” from you to waiting staff.

Usually, tips are left in cash, whereas gratuities are payments made electronically through a card terminal. The less commonly seen cover charge is a fixed charge per customer that is usually mandatory. Mandatory charges must be stated on tariffs or, in the case of restaurants, menus.

Cash tips are paid to individual employees, while credit card tips are paid to the restaurant. When it comes to the “service charge”, the situation remains opaque. That money is classed as part of the eatery’s income, to be used as the restaurateur sees fit. According to the British Hospitality Association, there is no legal requirement for it to pass on any of the service charge, in full or part, to the waiting staff.

What’s more, the service charge delivers a double blow, as while many employees do not benefit from it directly, its presence on a restaurant bill puts off many diners from leaving a cash tip on top (many simply think it is the same as a tip).

Alternatively, many restaurants allot payout via a points system, in which tips are pooled, then distributed at the end of the night.

According to a survey in the Caterer, 82% of those polled said that tips were shared among staff, while only 18% said they were allowed to keep tips given to them by customers they had served.

To make matters worse, according to trade union, Unite, in many schemes managers award themselves the highest points and receive the lion’s share of tips while those doing the hard work lose out. Over half of those who received a share of the tips said they felt the system was unfair and that they should be allowed to keep the tips they collected.

If you want to make sure that your server is getting every penny of that hard-earned cash, there are steps you can take.

Waitress bringing the bill to the table at an outdoor terrace restaurant — Bill of rights … you can ask for a service charge to be removed from a bill and pay a separate tip in cash. Photograph: Alamy

■ Pay all tips – including any service charge added to your bill – in cash. In theory, one of two things will then happen: either your server will pocket the money directly or, if there is a pooled-tips system in place, such gratuities should (so that they’re not liable for national insurance deductions) be collected and distributed by the “troncmaster”, a nominated non-management employee. Therefore, management should not be able to intervene to levy any “administration charge”.

■ Where a service charge is included on the bill (such as in some branches of Giraffe, see box) ask for it to be removed and pay a separate tip in cash. There are circumstances where you can’t do this, such as where the restaurant has made clear a mandatory service charge will apply for tables of, say, eight people or more.

■ Trade union Unite points out that asking waiting staff how their tips are distributed puts them in a potentially difficult position. Instead, ask a manager to explain the restaurant policy. This approach is worth taking at smaller, independent restaurants, where the tipping policy is less likely to be prominently displayed or on the company’s website. We have learned of one gastro-pub in Richmond, Surrey, for example, where none of the tips go to staff. If the policy seems unfair, make your feelings known and avoid restaurants that do not pass on tips to staff.

What is happening on the high street?
Here are the approaches taken by some high-street chains:

■ Prezzo: All cash tips are retained in full by the waiting staff and may or may not be shared with other employees in the restaurant. Credit card tips are subject to a 10% deduction to cover credit card fees, payroll and other house costs prior to the distribution in full to employees.

■ Pizza Express: All cash tips go directly to your waiter. There is an administrative charge of 8% on all credit card and service charge tips. The remaining 92% is split 70-30 between the waiter and the kitchen team.

■ Tragus (includes Cafe Rouge, Bella Italia and Strada): Any tips paid in cash are retained by the waiter. They may or may not have arrangements in place to share these with other employees in the restaurant and staff in the kitchen. Both credit card tips and service charge paid are subject to a 10% deduction for administrative and other house costs, prior to a full distribution to employees in the restaurant through the company’s payroll system.

■ Giraffe: The restaurants operate one of two structures. Either a service charge is added to the bill “for the benefit of all staff” – though Giraffe says you can “amend the optional service charge to reward the team”. Some of its other restaurants operate a discretionary tipping system. This means no service charge is added to the bill and you choose how much to reward, with cash or card, to the server or the team. All cash and credit card tips are placed in a tronc pool and are shared out to all staff. Under either method, tips are subject to a 10% deduction for administrative and other business costs.

HOW MUCH?

Most of us know it is appropriate to tip a waiter 10% or more at a restaurant but it’s not always clear where to tip elsewhere – or how much. We consulted etiquette experts Debrett’s:

At the pub You are not expected to tip with cash for drinks in pubs. If the barman gives especially good service or fills big orders for you, it is accepted to “buy one for yourself” or something similar. You are not expected to tip for food in pubs but, with the growth of gastropubs, this has become a grey area. If you feel the “pub” is more of a restaurant with a bar than a pub that serves food, you may want to leave a tip similar to one in an eating establishment.

Your taxi driver About 10% of the total fare is usual for licensed, metered taxis. Rural taxis and minicabs usually charge a pre-agreed, flat fare and many people do not add an additional tip.

At a hotel In smarter hotels tipping will be expected. Give a small gratuity (£1-£2) to bellboys or porters if they take your bags to your room. Doormen should be tipped upon checking out if they have helped with taxis or luggage. A banknote may be left in your room for housekeeping.

At the salon Stylists expect a tip of about 10% and a junior might be given £1-£2 per customer.