Changes to Tipping Laws and What They Mean for the Hospitality Industry

When you think of tipping, you might consider it something of an American trait. After all, in the States, the act of tipping is a serious business — in fact, it makes up an employee’s livelihood.

But in the UK, a tip has always been seen as an act of generosity rather than necessity; our staff are given a minimum wage, after all, so a tip is often deemed as a reward for notably good service, rather than a given.

But with rent costs what they are, minimum wage often just covers the roof over our heads. For food and other necessities, these employees are relying more and more on their tips, echoing the situation of many US waiting staff.

Between this and the sheer fact that consumers in the UK see tips as rewards for the employees directly, the problem of restaurants taking a cut of staff tips has boiled to the surface. Following the reaction of the public when it was revealed that some firms were taking around 10% of card-based tips, Prime Minister Theresa May has announced that restaurants will no longer be allowed to take tips away from staff.

How good are we at tipping?

What impact, if any, will this have on the hospitality industry? Well, according to This Is Money, one in 10 Brits don’t tip at all anyway. Those that do tend to leave, on average, 7% of the total bill as a tip instead of the usual 10%. The top reasons for leaving a tip centred around politeness and effort, and one potential reason for not leaving a tip is cited as concern over where the money really goes.

With tipping not being compulsory, it has an air of being rather uncontrolled — certainly a worry when it comes to money matters! There’s currently no law in the UK that states all tips have to go to staff. Sadly, this can mean tips don’t always reach the waiting staff intended; one employee in London spoke to the Guardian of how tips were used to cover breakages by staff and customers. They also voiced concern that the sharing-tips practice commonly found in restaurants can be wholly unfair, as an underperforming member of staff who received no direct tips from customers may end up with money from another member of staff putting a lot of effort into giving great customer service. On the flip side, that well-performing member of staff will lose some of the tips given to them by their happy customers. This results in a lack of effort being rewarded, and a great work ethic being reprimanded.

Customer suspicion over card tips

If customer concern over where the money is going is holding back tips, could this legislation see a rise in amount of people tipping? Potentially — if customers are assured the staff are receiving the tips, they will likely tip, and tip more generously.

Currently, there’s a difference between tipping with cash and card in terms of where it will end up. Cash tips belong to staff, but card tips belong to the business. Card tips end up in a system known as a tronc, which is then shared out in the wages. But it isn’t uncommon to hear stories of firms retaining part or all of the tronc, which has caused this public distrust of card tips. Customers are savvy to all of this and will often opt to leave a cash tip if they can and decline a card tip when prompted.

This issue and suspicion over card tips is a huge contributor to Brits being poor tippers; after all, with card payments overtaking cash transactions earlier this year, and the rising popularity and ease of contactless, customers are increasingly likely to not have cash to leave a tip, and feel uncomfortable with leaving a card tip without the certainty that it is going to the staff. In fact, studies show in 2016, only 40% of transactions were cash-based compared to 60% in 2006. A change in the law to assure card tips are the property of staff as much as cash tips could alleviate this problem and see more frequent and larger tips flowing in.

The problem of sharing tips

More needs to be done to ensure the best use of tips, beyond merely banning restaurants from taking a percentage of the staffs’ tips. For example, what about the kitchen staff? Should they receive a portion of the tips, given their contributions to a happy customer? Or are tips solely for the face-to-face experience?

One staff member noted that she would prefer to see a rise in basic wage rather than having to rely on tips. The problem of relying on tips is particularly evident in the US hospitality industry; while tipping is also not compulsory over there, ‘tipped’ employees aren’t covered by the usual minimum wage. Instead, their minimum wage sits at around $2.15 an hour, meaning staff are relying on pulling in good tips. This makes for a huge amount of effort on the waiting staff’s behalf to ensure customers are happy, perhaps, but at the cost of stable income. Then again, the staff tips go to, well, the staff who served that table! And a good thing too, given the recent generosity of one YouTuber who left a $10,000 cash tip for one lucky staff member!

Tipping tips and etiquette

The plan is to make it so companies can’t take tips away from waiting staff, but no action has yet been taken. So, in the meantime, what is the protocol for tipping in the UK? Here, we’ve gathered the best advice in regards to tips:

  • A service charge ≠ a tip — A common misconception, but the service charge added to a bill isn’t a tip to the staff. This can sometimes be requested to be removed from the bill in preference of leaving a cash tip. But the current misconception can cause service charges to reduce the likelihood of customers leaving tips (because they think they already did!)
  • The general consensus is a 10% tip — Many people are concerned over how much to leave as a tip. Too little might be insulting, for example. Well, generally, 10% of the total bill is a good guideline.
  • But not every time — Bad service happens, and in such a scenario, it’s perfectly fine to leave no tip. You may also receive exceptional service and want to tip more!
  • Not just restaurants — Tipping is a practice beyond the dinner table. From tour guides in small villages to staff at , many people can benefit from tips from happy customers! Again, the 10% rule is a good guideline, though for cab drivers, it’s common to simply round up the fare and leave the change.
Sources:

http://www.whototip.net/tipping-in-united-kingdom

https://www.thisismoney.co.uk/money/news/article-3342830/Millions-Brits-don-t-tip-just-7-average.html

https://www.theguardian.com/commentisfree/2016/may/11/waiters-reveal-what-they-really-think-about-tipping

http://www.bbcamerica.com/anglophenia/2012/08/tipping-in-america-how-to-do-it-and-what-to-expect-if-you-dont

https://www.theguardian.com/business/2018/feb/19/people-dont-carry-cash-uk-firms-adapting

https://www.theguardian.com/money/2018/feb/19/peak-cash-over-uk-rise-of-debit-cards-unbanked-contactless-payments

https://www.bbc.co.uk/news/newsbeat-45707539

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