Service charge scandal: to tip or not to tip?

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Should we be giving staff 'gratuities'? And when we do, how much of the service charge do the staff receive? Time Out lifts the lid

  • Service charge scandal: to tip or not to tip?

    Tipping points

  • I have a confession to make: considering I am a professional bar-goer, I am a terrible tipper. But I didn’t realise quite how bad until the other day, when a comment by a disgruntled bartender friend got me investigating the murky world of service charges, tips and gratuities.

    Up till then, I had always believed that the 12.5 per cent service charge you see on many bills in restaurants was a proper tip, destined for the pocket of the person serving me. Having paid that, I thought, I didn’t need to leave a cash tip except in the case of truly exceptional service. Indeed, I’d often feel a bit resentful about being obliged to pay a service charge at all, particularly on the occasions when a bartender had done little more than pass a pint over the bar to me. So it came as a shock to discover that, in many cases, the bartender won’t get that service charge as a supplementary payment. Even if they do, says Dave Turnbull of union Unite, chances are it will only be subsidising an hourly rate, which, without the service charge, would fall below the minimum wage of £5.52 an hour. In other words, the service charge is often used to make up the employees’ shortfall in pay. ‘At the moment, a loophole in the law means that under one system, employers can count tips towards the minimum wage,’ says Turnbull, ‘while under another – known as the “tronc” – they can’t count it towards minimum wage, but they can avoid paying National Insurance on it.

    'Either way, it’s confusing for customers, it’s confusing for the waiters and, we believe, it’s a situation which some unscrupulous employers are deliberately exploiting.’

    According to some reports, even Gordon Brown – whose party introduced the minimum wage in 1999 – was not fully aware of this loophole until earlier this year, when Unite joined forces with MP Michael Connarty to present him with a dossier on the subject.

    But while we wait to see if the government goes any way to reform the system, what is the best path of action for a customer wanting to reward good service? Turnbull’s answer is simple: ‘Ask where the service charge and tips are going, and if the tip you are leaving is in addition to the minimum wage. If the tip or service charge goes to the staff, then pay it in cash rather than by credit card, as credit card tips legally belong to the employer.’

    Even then, it seems there are unscrupulous employers who will dip into the cash tips, according to one waitress I spoke to.

    70 FXX thsanks.jpg‘I used to work at a café in Kentish Town where all the tips went in a pot which only the owner had access to, and then he’d refuse to hand them out,’ says Laura [not her real name]. ‘One week I’d done 18 hours and I asked for tips but he said I hadn’t worked enough hours to get any. Some weeks I worked out I was getting less than £5 an hour. I eventually left because of that, but I think one of the reasons they got away with it was that so many of the staff who worked there were foreign – there were two Russian girls in the kitchen who hardly spoke any English at all – God knows how they knew what they should be getting.’

    And badly paid staff won’t stick around, damaging the industry for servers and customers alike, argues Henry Besant, the man behind award-winning London bars including Green & Red and Lonsdale. His solution is to pay more in the first place. ‘At Lonsdale, we take the service charge – which is 12.5 per cent on all drinks not served at the bar – but we pay a higher salary, which the staff all negotiate individually. And the result is better staff loyalty and ultimately better service.’

    But that doesn’t mean the customer is off the hook, according to Besant. ‘This country needs to learn how to tip,’ he argues. ‘That’s the single biggest thing that would improve the service industry, since if the staff were paid better, they would look at it more as a career and then standards would rise.’

    And yet as everyone knows, the Brits are notoriously bad tippers, particularly in comparison to our American cousins, who view tipping – even on bringing a glass of water – as all but mandatory. Not that that’s done much to improve things for the customer, argues Simon Difford, author of a series of international bar and cocktail guides.

    ‘I think tipping like they do it in the US is a terrible thing,’ he says. ‘It’s not about getting better drinks, it’s more like a levy. Fifteen per cent is standard – although I tend to tip 20 per cent, but I do that everywhere – and that’s not a tip, that’s a tax. With the US system you’re removing any kind of incentive for providing good drinks and good service. In the US I don’t see tips as having improved the drinking environment. Why
    don’t they just put 15 per cent on the drinks and be done with it?’ he argues.

    I put this question to several UK bar managers, and while everyone agrees it’s the obvious solution, no one can give me a satisfactory answer as to why it hasn’t been done. Reading between the lines, I’d say many are reluctant to change the current system, mainly because it offers a (perhaps too) flexible way of paying your staff, and a means of listing food and drink at prices that look cheaper than they actually are.

    For now, then, bartenders are reduced to scrounging for tips with the aid of props like the tip tray. A personal bugbear of mine, these little tin trays, so beloved by posh gastropubs, turn the tip – something you originally might opt in to out of goodwill – into something that you must opt out of, stirring up resentment on both sides.

    ‘Certainly sometimes the trays are just used by bar managers wanting to give a higher impression for their bar,’ admits bartender Gregor de Gruyther, who’s worked at some of London’s best known bars. ‘But the pay levels being what they are, it’s something we’re forced into, really, so I’m ambivalent about it. The industry has been pushing a lot lately for the introduction of a qualification system for bartenders to make it a better career with better wages. But at the moment a bartender has a maximum six years on the market – and when you look at it like that, well, you’re gonna be putting out those trays.’

    Service charge tips

    Your rights, according to Peter McCarthy of Consumer Association helpline Which? Legal Services (01992 822 800/www.which.co.uk)

    Why do service charges vary?

    It is up to each business whether they make the service charge compulsory or optional and what percentage to levy.

    Do you have to pay it?

    A business that adds a service charge must state this in a prominent place – on the menu, or on a sign on the wall, for example – where you can see it before you make your order. If this has been done then you are obliged to pay it, unless service has been really exceptionally bad.

    What if the service is poor?

    If a problem with service does arise – there is a long delay between courses, say – you should alert the management to it as soon as possible and give them a chance to put things right.

    The last resort?

    If alterting the staff or management to a problem with the service does not solve the problem, you can in theory withhold a suitable proportion of the service charge (though the proportion is hard to quantify). Alternatively, you can pay the service charge ‘under protest’ with the intention of claiming it back later in the courts – something you must state in writing at the time. But you should bear in mind this could take six to nine months and a court hearing – so it’s definitely best to resolve the situation some other way.

Users say

30 comments
Thomas K
Thomas K

When you pay the bill in the restaurant,  if you get your change without putting them on the tray, should I leave tips on the table ?

stefano
stefano

The reality is that the companies few years ago forced the government to include the service in the bill, so that they could keep part of the tips. If this hadn't happened many restaurants would have shut down and result would have been bad for the economy

Luke
Luke

it's only the tip of the iceberg!!...............I think the Government should take action regarding speculation against waiters ,or generally employees, from their employers . It seems clear to me that is sounds like robbery and on top of that people who works in this enviroment is getting frustrated and angry , how can I / we think of myself/ourself to be honest and loyal to our employer and be motivated to give a good customer service when we feel to be exploited . And I will mention again that there is a lot to undercover ............so a lot that u can make a documentary about it. ..........Regarding Harrods where u could never expect the unexpected because you might think about it like a place where everything going right , because it's a wealthy and luxury shopping center , so they have a name to preserve but instead is not , believe it or not there would be a place there where all the service charge goes all to the company ( that I dont call it robbery , but crime ) and not to the waiters because the reason is the waiter get enough tips to cover their overall wage . ..............but remember what I said , it's only the tip of the iceberg.

Luke
Luke

it's only the tip of the iceberg!!...............I think the Government should take action regarding speculation against waiters ,or generally employees, from their employers . It seems clear to me that is sounds like robbery and on top of that people who works in this enviroment is getting frustrated and angry , how can I / we think of myself/ourself to be honest and loyal to our employer and be motivated to give a good customer service when we feel to be exploited . And I will mention again that there is a lot to undercover ............so a lot that u can make a documentary about it. ..........Regarding Harrods where u could never expect the unexpected because you might think about it like a place where everything going right , because it's a wealthy and luxury shopping center , so they have a name to preserve but instead is not , believe it or not there would be a place there where all the service charge goes all to the company ( that I dont call it robbery , but crime ) and not to the waiters because the reason is the waiter get enough tips to cover their overall wage . ..............but remember what I said , it's only the tip of the iceberg.

Jenny M.
Jenny M.

I used to work for Harrods Restaurants for years. A year ago recently added 12.5% service charge on all bills. At first the bill given to the customers said that all service charge are given to the waiters. Once we complained about the fact that was not true and whether we should make teh customers aware of that, they took the line away as in reality only 40% goes to the staff and the rest are kept for administration fees. Ridiculous as it makes them around 4.5 millions only on service harge. Good for them but poor way of treating their staff and customers. I am surprised how many still pay that vast amount of money for their food and still pay 12.5% of service charge on top.

Alex
Alex

As I used to know someone who worked as a waiter in Cote, I know just how scandelous their 'service charge is'... get this: They are told to lie on behalf of the company if any customers ask who gets the 'service charge'... They are told to say it is shared among the service staff... this is a complete lie... the service charge goes straight to the company and a tiny percentage of it is used to pay the staff £1.60 per hour more than the minimum wage... Teh company makes about £60 per hour extra per hour per waitress. If that is not a scandal, I do not know what is.

JOHN WARD MORORHOUSE
JOHN WARD MORORHOUSE

Of course one wants to tip, but i want to tip, i don't want it taken on the assumption that I will contribute to someone's rotten pay packet, structured cynically by the chain who assume that there will be a tip to bolster this measly living. These chains will, really, end up killing the golden goose, and I for one am ready to pack a sandwich and a bottle of supermarket wine.

john ward moorhouse
john ward moorhouse

the service charge - 15%, is slipped into the bill and one looks to then leave a tip for the waiter. Only by looking at the detail did I discover this and then: I HAD TO GO THROUGH THE "EMBARRASSING" ROUTINE OF HAVING THIS INIQUITOUS CHARGE REMOVED. This is, of course what the chain relies on - you never will ask for it to be removed. STOPPED EATING AT COTE - THEIR LOSS.

a.befan
a.befan

There is no issue on tips that needs so much nonsense being written,and these disguised appeals that somehow the Govt should get involved. This is a private matter between the employee and the employer. When you interview for a waitstaff job make sure you know how tips are handled. If you dont like the system,then dont work there! It cant be more simple. Find a place that has a system you like and work there. And if all you can get is a job with a system you dont like,then either change career or take the job and suck it up. Stop this useless bleeting about the tipping system and take action yourself. No one is forcing you to take that job and no one is forcing you to be a waiter. Having accepted the terms when you start work , stop moaning and get on with doing the best job possible.

Imawaiter
Imawaiter

Until the law clearly states who owns the tips & service charge, nothing good will happen. Owners will continue to think that tips & service charges are their money and do whatever they like with it. Staff like me will get very little if not nothing. Customers will continue to pay without really knowing who gets the money.

Evelyn
Evelyn

Usually I will ask who the service charge goes to. if the staff, ok. If not, I take it off my credit card payment and then pay a tip in cash. Does that work out better for staff? Can someone tell me or am I wasting my time. Another question: what is the service charge actually for? When restaurants price their dishes, they take into account running costs of the restaurant already including wages so exactly what does the service charge pay for?

T.s
T.s

The new law has made no difference at all wage still comes out of our tips. Until the law is changed to force employers to let the staff rather than management control the tips your money will go in owners pockets and service will just get worse. They earn millions using and abusing their staff with the connivance of government and then does goverment really care NO!! AND than is not goverment eather it`s a ignorant english consumer that dont care .

alicia
alicia

I think we end that maybe if all customers would start refusing to pay service charge. So please don't pay a service charge you putting those money in restaurant owners pockets.

Paddy
Paddy

This is an issue that extends beyond restaurants. As a bellhop in a city hotel, I have discovered something very similar. Large groups staying at hotels often pay a service charge on behalf of their guests. This service charge is intended to cover tips for valets, and bellhops. The hotel gets the service charge, which it uses to pay the base minimum wage for tipped employees. In the United States this may be as low as four dollars an hour. Meanwhile valets and bellhops are not allowed to accept tips from these guests. it is dishonest on behalf of hotels. They are deceiving their guests while not giving their employees a fair wage. My advice is never pay an optional service charge on behalf of someone else. I would not offer any additional money to hotels trusting them to distribute those as tips. Hotels are greedy. Their priority is making money for the management and owners rather that ethically dispersing service charge gratuities to those who preform the work.

Lim
Lim

Ya, even now COTE french restaurants are the same. They use that 12.5% of service charge to pay employee's wages. This is totally unfair....Why the government cant stop this fenomena to keep happening? Is it legal to have that payment? Employees cant even get any single penny from that service charge...Please if you visit COTE french restaurant please remember ask not to pay the service charge!!!!! Remember to tell your friends!! Pay the tips directly to the waiter/waitress who served you in cash.

Ben
Ben

It is disappointing that someone from the USA suggests that because his/her federal law says one thing then the same must follow in the UK. Here's a tip "George", we don't have the death oenalty here, either, or the right to bear arms. Go figure! If someone uses a credit card to pay a sum over to a corporation, then that some "belongs" to said corporation - most importantly, in the eyes of the tax authorities. If that sum is then distributed to staff - which the corporation may or may not choose to do - then it has to be taxed in the same way as wages. There can be no ambiguity when it comes to such payments. Where there IS some leeway is in the handling of cash tips. The tronc system is one method by which this can be administered although it can have its own shortcomings regarding who gets what and why. For that reason I always tip in cash and leave it to the waiting staff to make their own decision whether they want to share. If the service charge is "voluntary", likewise I pay a net amount by card and a suitable tip in cash. It is worrying that some chains monitor the service charge receipts on an employee by employee basis which smacks of bullying and adleiberate lack of transparency on their part. In an ideal world the staff would be remunerated fairly by their employer - and the advertised price would be the price that I was charged when the bill was prepared - and I would only tip for exceptional service. There are many other UK workers who would deem themelves to be poorly paid but few where the concept of tipping has become established. I hope that the incidence of "services charges" diminishes rather than becoming more widespread.

anon
anon

The new law has made no difference at all. My employer just changed the way our payslips were written. Half of the minimum wage still comes out of our tips. Until the law is changed to force employers to let the staff rather than management control the tips your money will go in owners pockets and service will just get worse.

E.Jones
E.Jones

I just felt I had to comment on the posts by C. Eider. I find what you have to say extremely ignorant and offensive. First off it is extremely naive to say why not just go off and get another job, when currently the world is in economic turmoil and unemployment levels are higher than ever. Another large part of the issue here, which you appear to have completely overseen, is that many of the people in the catering industry are unaware of the mishandling of their tips, and it is our duty to stand up for these people. I've worked alongside people from all over the world in restaurants, who have worked exceptionally hard, some working 70 hour weeks, to simply have the tips they had fairly earned go to the owner, who had been at his holiday home all week. For you to say these people do not deserve their tips is ludicrous. I wonder what great service you do for the world that makes you feel you "deserve so much"? Finally you go on to further demonstrate your imbecility by stating "Really good waiters are always recognised and tipped accordingly". Have you not read the article and subsequent discussion? Yes many good waiters are recognized, but customers often do not understand that their waiter may not be receiving any of the service charge or cash tip that they thought they were leaving for them. All I ask is that next time you decide to share your opinions with the world, you pause to show some empathy. I'd be delighted to have you as my waiter for a meal, earning £4.83 per hour, and then for you to watch as the tip I wanted to give to you was pocketed by the managers!

George
George

It has been suggested that credit card tips legally belong to the employer. Please cite the law which suggests that credit card tips belong to the employer. Here In America, we have a federal regulation that seems to contradict such an idea. 29 CFR 531.53 - Payments which constitute tips. In addition to cash sums presented by customers which an employee keeps as his own, tips received by an employee include, within the meaning of the Act, amounts paid by bank check or other negotiable instrument payble at par and amounts transferred by the employer to the employee pursuant to directions from credit customers who designate amounts to be added to their bills as tips. I don't understand how the UK can have a law suggesting that tips paid by way of credit card belong to the employer. Clearly the amounts designated as tips are not intended for employers.

Helen D
Helen D

I've read lots of comments regarding the management of service charge in restaurants in London.Some think the vwaiters are not doing the hard job, is the kitchen in fact..Well, kitchen staff take fix salary every month/yearly which they negotiate when they sign their employment agreement , while waiting staff are told they're getting the tips from the 12.5 % service charge to top up their minimum wage.I have worked in restaurants where service charge was on the bill, yet customers could opt out and tip their waiter in cash.Lots of people have done so as they wanted to repay the waiter for the service provided and not give the company/owners the satisfaction of grabbing the money and using it as they please. I think there should be a law stating exactly how much management can take from the service charge before giving it to staff. As a customer, I always tip cash if im pleased with the service, anyone can ask for the service charge to be taken off the bill..I've worked in America as well and customers often tipped on top of what they were supposed to and I was pocketing all tips! The owner was happy to see we were earning a lot! so maybe the question is elsewhere, maybe its about people, honesty, selflessness and respect.

C.Elder
C.Elder

All you people who work in restaurants and complain in these messages,why not go and get a different job if you are not happy about the "tip" situation? Most of my experiences in British restaurants are very poor service,and frankly if i had a choice i would not leave much "extra" except in places that really perform. All you staff do is bring a dish from the "pass" to the table.You dont cook it,ideally you shd not drop it,and most of you don't keep an eye out such that you bring it when it is ready,but you leave it languishing there while you chat to yr mates on the waitstaff.Few if any of you bring the order to the person who oredered it-you ask who ordered the gggg? Sorry but isn't it yr job to know?And fewer still keep an eye on the table to replace empties,and take away the dirty dishes ,but leave them in front of guests for ages. I could go on,but most of you do a very poor job,and don't deserve much.Really good waiters are always recognised and tipped accordingly.The first thing the client notices is the service,then the food.If you are not getting well tipped,then you shd examine how you do yr job.

Thomas Song
Thomas Song

The idea of the collection of the service charge in service related business was the longing for a more personage or in others word organic treatment between human contacts in a service related activities. It was the money pay as the tribute to the management team as the appreciation of their afford in doing so. In Summary, it was like the amount of money you got to pay to a lawyer the moment we engage their service regardless we win or lost in court case. The definition of Tip-ping according the dictionary: transitive and intransitive verb (past and past participle tipped, present participle tipping, 3rd person present singular tips) Definition: 1. give gratuity: to give somebody a gift of money in return for a service, especially in addition to what is owed Tipping is usually given when someone is very satisfied over someone presence in providing the services they needed in a very personage way. In summary, it was like the extra money we pay to a lawyer ( in agreement ) when we win an unexpected court case in appreciating their afford in helping us to do so. Service Charge and Tipping The service charge is personage and doesn’t go thru the accounting system and is waiving from the Employee Provision Fund. Service Charge is for the management who run the business whereas the tipping go individulally. They are the same just diferent people receving it and one is compulsory and another one is optional.

Vincenzo
Vincenzo

I do work for strada, and i'm still not receiving any tips, on the bill there is the 12.5% service charge and to the waiter goes like 4 pence per hours more, for like 100 pund service.. so don't pay it, if you want to give money to waiters give him but don't pay the service...

p johnstone
p johnstone

got one better i have just been in my local diy at fisherie green aberdeenshire i picked up a large bag of dog food and took it to the counter where the lady informed me there would be a £1 service charge needless to say told her to put both items where the sun does not shine, since i have found out i am not alone in this

Franckie
Franckie

I've been working in the hospitality around the U.K. for many years and I can assure you that if people knew the way many companies handle the sharing of the service charge they would not go back for dinner. Many G.M. use the service ch. to pay for breakages and for the management bonuses. Diners would probably not interfere with the way a restaurant' s run, but they would be happy to know where their money goes and why. A solution: let the staff to elect the person in charge of the money and stop the robbery.

Cle
Cle

I've worked at strada restaurant In Marylebone, London. When customers refused to pay service charge and tip by cash, the manager took it!!! The manager used to monitor all tables to make sure that they have paid it. At a meeting she said: "in case customers will not pay service charge, I'm going to reduce your wages". Also when customers run away without paying the bill, I had to pay it (it is in the company policy). That is what companies do. They treat their staff like slaves and the Government ignore it or doesn't care at all. At strada the company pay £2.50/£3.00 per hour plus an average of 2.55 to 3.50 pounds from the service charge. That company is been acquired by tragus (also cafe rouge, bella italia and many others). Tragus is under blackstone (it's acquiring lots of companies in Europe). They earn billions using and abusing their staff with the connivance of governments.

jeff
jeff

An example. I live in Abbey Rd. (North London). Pop in a local pub ( The Salt House) once in a while. Here is what I got to know the other day. The owner gets hold of the service charge. The staff are paid 5.52. Where is the truth? Ask to take off the service charge off your bill!!!!Tip in cash. Shame on you The Salt House!!!!!

Julian at The Watershed Wimbledon
Julian at The Watershed Wimbledon

All tips at The Watershed go to the server and we pay each bar server an extra 2 hours pay if they take over a certain amount in a night - this ensures speedy service, essential in a nighclub.

C.Elder
C.Elder

It is standrad practice,in london and in most other places including New york and the U.S.,in general that "tips" are used to make up the salary of the staff to at least minimum wage.NY staff are paid $4.60 and the tips are used to get this to the $.7.20 minimum wage.So this should not be a surprise to anyone.The Brits are notoriously stingy when dining out,quibbling with everything,and tipping poorly,when most times it is not the waiter's fault that the client has had to wait,or the food is not what was expected.The kitchen rules. Giving all the money to the waiter rewards someone who fetches your meal for the entire meal experience-i.e. the cooks etc get nothing,yet they have done the heavy lifting. Just pay the credit card service included amount and let the restaurant sort out who gets what.If a waiter feels underpaid,then he can easily get a job elsewhere.No one is forced to stay in a particular restaurant.So,let's stop all this hypocritical angst about what the waiter gets.It's the restaurant mgmt 's job to handle that.The client is just there for a meal,not to interfere with how the restaurant is run.

Henry
Henry

Who created the 12.5% service charge included on the bill? Certainly not a waiter/waitress... You should tip if you wanted to... And that value shouldn't be on the bill! What I mean... ASK to take that service charge OFF the bill as otherwise the waiter/waitress once cashing himself/herself out on the end of the day as it was included the service charge is going to the company and NOT for the staff that hardly worked to serve you. On my experience... when you ask to take the service charge off... a manager will come along... asking... "Have you asked to take the service charge off the bill? Why? Was it any problems on the service?" That is clearly a way to try them to keep the "TIP" for themselves... ASK TO TAKE OFF THE SERVICE CHARGE OFF THE BILL!!! And if deserved... you tip in CASH the value you THINK the waiter/waitress deserve... And some places EVEN HOLD THE CASH TIPS FROM THEIR STAFF... Mad as it sounds but TRUE!