Legal and Policy Director at the British Hospitality Association says:
“Dining is all about customer experience and we leave the choice of tipping to the customer. No customer should feel obligated or pressured to provide a tip or accept an optional service charge.
Customers should not feel obligated to tip, especially when service is substandard. Remember that tipping fosters a service culture and it encourages people to work in the industry. Given that hospitality and tourism employs 3 million people in the UK, anything we do to support and encourage those 3 million to keep up the good work is beneficial. ”
What’s the difference between service charges and tips?
Both tips and discretionary service charges are optional payments provided by customers for the service received.
Discretionary service charges are automatically added to the bill as a set percentage of the total amount. This percent is noted on the menu and the bill. The customer is then free to decide whether or not to pay or vary this amount.
The benefit of a service charge is that it is low maintenance for the customer. The math’s is already done for them. Upon payment it is divvied up to staff according to a set procedure.
A tip is where the restaurant hasn’t suggested a service charge but the customer feels obliged to award the service with a bit extra. In such cases the customer is left to determine any gratuity without suggestion from the restaurant.
Why not factor the tip into the overall cost of the meal?
Voluntary service charges and tips receive more favorable tax treatment for the employee than required service charges.
A voluntary tip or service charge benefits employees because discretionary service charges and tips are not subject to VAT or NIC. Tips are subject to taxes and are reportable as income to HMRC.
Additionally, if the price is included in the cost of menu items, it is no longer optional.
Where does the money go?
Each establishment will have its own policy. For those that have signed up to the BHA’s Fair Tips Code they should:
- Be able to tell you what is deducted as a handling charge
- How the remainder is shared amongst staff
- The process for distribution of tips amongst staff – e.g. via a staff representative etc.
What is a tronc?
A tronc is an arrangement set up by the employees to pool and distribute gratuities among staff. A tronc is operated by an appointed employee known as a troncmaster who is responsible for deducting pay-as-you-earn taxes.
What if you aren’t satisfied?
If you aren’t satisfied with the service, don't leave a tip and make an effort to let the establishment know of anything in their provision of service that should be improved upon in the future.