There are few subjects within the hospitality industry as contentious as tipping. Should they be shared? Does the kitchen get an equal amount? Is the business entitled to tips? Should tips be declared for tax? I have previously written an article on tipping and the etiquette from a customer’s point of view but there are some new laws coming into force in Britain and France that are going to have an effect.
We have all been asked by customers, ” do you get the tip?” The response can vary from “yes” to “some of it” to “no, the business takes all tips left on credit cards”. This can be extremely frustrating for both customers and employees. I have always said to my staff that a tip, or gratuity, is something that is earned, not expected and should, therefore, be given to the staff. I do not believe that either management or the business should have a cut.
In my opinion the fairest method of dividing tips is using a tronc system whereby they are shared at the end of each shift or even on a monthly basis depending on the number of hours worked and they should be shared to every member of staff. With cash that is easy but what about when a tip is added to a credit card payment. Does that belong to the business? After all, a percentage of every card payment is lost in charges to the bank.
In Britain a new ruling is due to come into force stating that all tips, whether they be cash or added to card payments belong to the staff. Does this mean that restaurants will have to manage the tip pot and therefore declare to the tax authorities how much extra the staff are receiving? In the UK tips should be declared for tax by employees.
Will some unscrupulous restaurants feel that their business is going to lose out? And as a result pay their staff a lower hourly rate and top it up with tips. I hope not! Unfortunately the new law is not likely to come into effect until late in 2022, but it will make it à criminal offence to withhold tips from staff members.
The second new piece of legislation with regard to tipping is coming in France. France has for many years had a policy of including on all menus and price lists the phrase “service compris”, basically indicating that service is included and that a service charge or tip is not expected. And from experience I can tell you that the French do not tip hugely!
As with the majority of countries tips should be declared by employees as extra income and included on their annual tax return…..until now. The French government has decided to “defiscalise” tips, or “Pourboires” as they are known, if they are added on to a credit card payment.
The result means that businesses will no longer be taxed on these amounts as being extra revenue and staff will not have to declare these amounts on their annual tax return. The government believes that it will encourage customers to leave better tips when paying by card.
As a footnote I would like to see employers stop the practice of including potential tips in the remuneration package. For example, do not pay a lower hourly rate and top it up with an amount that could be earned from tips. Pay a decent wage, hire professional staff and let them earn the extra from the customer for doing à job that is in excess of what is expected.