Gratuity

Leaving some money on a restaurant table is a common way of giving a tip to the serving staff.

A gratuity (also called a tip) is a sum of money customarily tendered, in addition to the basic price, to certain service sector workers for a service performed or anticipated. Depending on the country or location, it may be customary to tip servers in bars and restaurants, taxi drivers, hair stylists, and so on.

Tips and their amount are a matter of social custom and etiquette, and the custom varies between countries and settings. In some locations tipping is discouraged and considered insulting; while in some other locations tipping is expected from customers. The customary amount of a tip can be a specific range of monetary amounts or a certain percentage of the bill.

In some circumstances, such as with U.S. government workers[1] and more widely with police officers, receiving gratuities (or even offering them) is illegal: they may be regarded as bribery.[2] A fixed percentage service charge is sometimes added to bills in restaurants and similar establishments. Tipping may not be expected when a fee is explicitly charged for the service.[3]

From a theoretical economic point of view, gratuities solve the principal-agent problem,[4] and many managers believe they provide incentive for greater worker effort.[5] However, studies of the real world practice show that tipping is often discriminatory: workers receive different levels of gratuity based on factors such as age, sex, race, hair color and even breast size, and the size of the gratuity is found to be only very weakly related to the quality of service.[6][7]

Etymology and history

The first usage of the term "tip" in the sense of giving a gratuity dates back to 1706. Pictured here are European waiters from the early 1900s.

According to the Oxford English Dictionary, the word tip originated as a slang term, and its etymology is unclear. According to the Online Etymology Dictionary, the meaning "give a small present of money" began around 1600, and the meaning "give a gratuity to" is first attested in 1706.[8] The noun in this sense is from 1755. The term in the sense of "to give a gratuity" first appeared in the 18th century. It derived from an earlier sense of tip, meaning "to give; to hand, pass", which originated in the rogues' cant in the 17th century. This sense may have derived from the 16th-century tip meaning "to strike or hit smartly but lightly" (which may have derived from the Low German tippen, "to tap") but this derivation is "very uncertain".[9] The word "tip" was first used as a verb in 1707 in George Farquhar's play The Beaux' Stratagem. Farquhar used the term after it had been "...used in criminal circles as a word meant to imply the unnecessary and gratuitous gifting of something somewhat taboo, like a joke, or a sure bet, or illicit money exchanges."[10]

The practice of tipping began in Tudor England.[11] "By the 17th century, it was expected that overnight guests to private homes would provide sums of money, known as vails, to the host’s servants. Soon afterwards, customers began tipping in London coffeehouses and other commercial establishments."[11]

The etymology for the synonym for tipping, "gratuity", dates back either to the 1520s, from "graciousness", from the French gratuité (14th century) or directly from Medieval Latin gratuitas, "free gift", probably from earlier Latin gratuitus, "free, freely given" . The meaning "money given for favor or services" is first attested in the 1530s.[8]

In some languages, the term translates to "drink money" or similar: for example pourboire in French, Trinkgeld in German, and drikkepenge in Danish. This comes from a custom of inviting a servant to drink a glass in honour of the guest, and paying for it, in order for the guests to show generosity among each other. The term bibalia in Latin was recorded in 1372.

Tronc

A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade. The person who distributes monies from the tronc is known as the troncmaster. When a tronc exists in the UK, responsibility for deducting pay-as-you-earn taxes from the distribution may lie with the troncmaster rather than the employer.[12][13] (The word 'tronc' has its origins in the French for collecting box.) In June 2008, the Employment Appeals Tribunal ruled in a UK test case (Revenue and Customs Commissioners v Annabel’s (Berkeley Square) Ltd) that income from a tronc cannot be counted when assessing whether a wage or salary meets the national minimum wage.

By region

Asia

China

In China, traditionally there is no tipping. However, hotels that routinely serve foreign tourists allow tipping. An example would be tour guides and associated drivers.[14]

In Hong Kong, tipping is not typically expected at hotels or restaurant establishments, where a "service charge" of 10% is added to a bill instead of expecting a gratuity. Taxi drivers in Hong Kong may also charge the difference between a fare and a round sum as a "courtesy fee" to avoid making change for larger bills.

One exception, where tipping is accepted is in Macau, previously a colony of Portugal.[15]

Japan

A rickshaw operator pulls two guests near Kyoto.

In Japan, tipping is not a part of the culture. It is not expected and can cause confusion.[16] Like many other countries in East Asia, Japanese people see tipping as insulting.[17]

South Korea

Tipping is not customary in Korean culture, and tipping is not expected in general service industry.[18] Some people even regard tipping as an inappropriate behavior.[19] High-end hotels and restaurants often include service charge between 10% to 15%, but it is always included in the bill, and customers are not expected to leave separate gratuity for servers beyond what is included in the bill.[20]

Singapore

In Singapore, tipping is not common. Bars and restaurants typically add a 10% service charge although it is not given to the wait staff. Tips are seldom given in a Hawker centre, coffee shop, or taxi.[21]

Taiwan

In Taiwan, tipping is not customary, but all mid and high end restaurants include a mandatory "10% service charge", which is not given to the service staff, but rather considered by Taiwanese law as general revenue, as reported by the Taipei Times in "False Gratuity" on July 9, 2013.

Europe

Albania

Buskers often punctuate their performances with requests for tips.

Tipping (bakshish) in Albania is very much expected almost everywhere. In recent times it has become more common, as many foreigners and Albanians living abroad visit Albania. Leaving a tip of around 10% of the bill is customary in restaurants; even porters, guides and chauffeurs expect tips. Duty-free alcohol is often used as a type of tip for porters, bellhops and the like, however some people (such as Muslims) can find it offensive.[22]

Croatia

Tips (tringelt, napojnica, manča, tip) are sometimes expected, mostly in restaurants – but they are not mandatory. Restaurant tips are around 3-5%[23] (or more). In clubs or cafe bars, on the other hand, it is common to "round up the bill". It is not common to tip taxi drivers or hairdressers.

Denmark

Tips (drikkepenge, lit. "drinking money") are not required in Denmark since service charges must always be included in the bill by law.[24] Tipping for outstanding service is a matter of choice, but is not expected.[25]

France

Cafes and restaurants include a 15% service charge in the bill, as required by French law for tax assessment. Service compris indicates that the tip has been added to the bill, but sometimes the wait staff do not receive any of it.[26] Tipping is better received in venues accustomed to tourists, but can be treated with disdain in smaller food establishments and those in more rural areas. The amount of the tip is also critical. A 5% tip will do nicely for good service. For superior service in higher-end eating establishments, a more generous tip would not be out of place.[27] However, the rare waiter/waitress accustomed to more generous foreign customers have no problem receiving a tip of up to 10% or more.

Austria and Germany

Coat check staff are usually tipped for their service.

Tipping (Trinkgeld) is not seen as obligatory. In the case of waiting staff, and in the context of a debate about a minimum wage, some people disapprove of tipping and say that it should not substitute for employers paying a good basic wage. But most people in Germany consider tipping to be good manners as well as a way to express gratitude for good service.

It is illegal, and rare, to charge a service fee without the customer's consent. But a tip of about 5% - 10%, depending on the type of service, is customary. For example, Germans usually tip their waiters but almost never the cashiers at big supermarkets. As a rule of thumb, the more personal the service, the more common it is to tip. Payments by card can include the tip too, but the tip is usually paid in cash when the card is handed over.

At times, rather than tipping individually, a tipping box is set up. Rounding up the bill in Germany is commonplace, sometimes with the comment stimmt so ("keep the change"),[28] rather than asking for all the change and leaving the tip afterwards. Or the customer says how much he will pay in total, including the tip: thus if the basic price is €10.50, the customer might, rather generously but not unusually, say zwölf ("twelve"), pay with a €20 note and get €8 in change. When paying a small amount, it is common to round up to the nearest euro (e.g. €1.80 to €2.00).

Sometimes a sign reading Aufrunden bitte[29] ("round up please") is found in places where tipping is not common (like supermarkets, clothing retailers etc.). This requests that the bill be rounded up to the nearest €0.10. This is not to tip the staff, but a charity donation (fighting children poverty), and completely voluntary.

In Germany tips are considered as income, but they are tax free according to § 3 Nr. 51 of the German Income Tax Law.[30]

Hungary

The Hungarian word for tip is borravaló (literally "money for wine", a loose calque from German: Trinkgeld) or colloquially baksis (from Persian: بخشش‎‎ bakhshesh[31]), often written in English as backsheesh. Tipping is widespread in Hungary, the degree of expectation and the expected amount varies with price, type and quality of service, also influenced by the satisfaction of the customer.[32] Like in Germany, rounding up the price to provide a tip is commonplace.

Depending on the situation, tipping might be unusual, optional or expected. Almost all bills include service charge - similarly, some employers calculate wages on the basis that that the employee would also receive tips, while others prohibit accepting them. In some cases a tip is only given if the customer is satisfied, in others it is customary to give a given percentage regardless of the quality of the service, and there are situations when it is hard to tell the difference from a bribe. Widespread tipping based on loosely defined customs and its almost imperceptible transition into bribery is considered a main factor contributing to corruption. A particular Hungarian case of gratuity is hálapénz ("gratitude money") or paraszolvencia, which is the very much expected – almost obligatory though illegal – tipping of state-employed physicians (Hungary's healthcare system is almost completely state-run and there is an obligatory social insurance system).

Iceland

In Iceland tipping (þjórfé, lit. "serving money") is not customary and never expected.[33]

Ireland

Tipping is generally optional but often expected for certain types of services. It is customary to tip for table service in bars and restaurants, but not for barmen. People generally tip postal workers and sanitation workers around Christmas time. Services like hairdressing, especially for women, often expect tips. Tips are not based on a percentage of the transaction.

Although it has been cited that tipping taxi drivers is typical,[34] it is not common in practice.

Italy

Tips (la mancia) are not customary in Italy, and are given only for a special service or as thanks for high quality service.[35] Almost all restaurants (with the notable exception of those in Rome)[36] have a service charge (called coperto); waiters do not expect a tip, but will not refuse it, especially from foreign customers. In cafés, bars, and pubs it is not uncommon, on paying the bill, to leave the change, saying to the waiter or to the cashier "tenga il resto" ("keep the change"). Recently tip jars near the cash register are becoming widespread, however in public restrooms they are often forbidden.[37] Leaving the change is also quite common with taxi drivers. When using a credit card, it is not possible to add manually an amount to the bill; instead one can leave some coins as a tip.

Norway

Service/service charge is included in the bill. It is uncommon for Norwegians to tip taxi-drivers or cleaning staff at hotels. In restaurants and bars it is more common, but not expected. Tips are often given to reward high quality service or as a kind gesture. Tipping is most often done by leaving small change (5-15 %) at the table or rounding up the bill.[38]

Oslo Servitørforbund and Hotell- og Restaurantarbeiderforbundet (The Labor Union for Hotel and Restaurant Employees) has said many times that they discourage tipping,except for extraordinary service, because it makes salaries decrease over time, makes it harder to negotiate salaries and does not count towards pensions, unemployment insurance, loans and other benefits.[39][40][41][42]

The Netherlands

Tipping in the Netherlands is not obligatory, while customary in restaurants, bars, taxis and hotels (bar, restaurant, maids and bellboys). If service was poor, it is acceptable not to tip, while guests who receive good to excellent service often tip in a 5-15% range, with an average of 10% and exceptions of 20% if service was unparalleled.

Romania

The amount of the tip (bacşiş) and method of calculating it will vary with the venue and can vary from 1-2 RON to 10% of the bill. The tips do not appear on bills and are not taxed, thus being an entirely black market revenue. If paying by card, the tip is left in cash alongside the bill.

While tipping is not the norm, servers, cabbies, hairdressers, hotel maids, parking valets, tour guides, spa therapists etc. are used to receiving tips regularly and are likely to consider it an expression of appreciation for the quality of the service (or lack thereof). If offering a tip, 5-10% of the bill is customary, or small amounts of 5, 10 or 20 RON for services which are not directly billed. For other types of services it depends on circumstances, it will not usually be refused and will also be considered a sign of appreciation. For instance, counter clerks for drug stores or supermarkets are not tipped, but their counterparts in clothing stores can be.

Tipping can be used proactively to engender favor, such as getting reservations or obtaining better seats. However, care should be taken for it not to be seen as a bribe, depending on circumstances. While tipping is overlooked in Romania, bribery is a larger issue which may lead to legal consequences.

There is an ongoing aversion about both giving and receiving tips in coins, due to the low value of the denominations. It is best to stick to paper money. Offering coins can be considered a rude gesture and may receive snarky or even angry remarks.

On the other hand, the coin handling aversion has resulted in the widespread practice of rounding payments. This is not technically a tip and as such is not aimed primarily at the individual at the counter, but rather at the business. Nevertheless, if done with a smile it can be seen as a form of appreciation from the customer towards the clerk. Etiquette demands that one of the parties offers the change, but the other can choose to tell them to keep all or part of it. Small businesses may sometimes force the issue by outright claiming they are out of change, or offering small value products instead, such as sticks of gum; this is considered rude and it is up to the customer to accept or call them out for it. The reverse can also happen, where the clerk does not have small change to make for the customer's paper money, but chooses to return a smaller paper denomination and round down in favor of the customer, in exchange for getting them through faster. The latter usually happens only in the larger store chains.

Slovenia

Tipping is not common in Slovenia, and most locals do not tip other than to round up to the nearest Euro. Recently, areas visited by many tourists have begun to accept tips of around 10 - 20%.[43][44]

Spain

Tipping (propina) is customary but not generally considered mandatory in Spain, and depends on the quality of the service received. In restaurants the amount of the tip, if any, depends mainly on the economic status of the customer and on the kind of locale, higher percentages being expected in upscale restaurants. In bars and small restaurants, Spaniards sometimes leave as a tip the small change left on their plate after paying a bill.[45][46] Outside the restaurant business, some service providers, such as taxi drivers, hairdressers and hotel personnel, may expect a tip in an upscale setting. In 2007 the Minister of Economy, Pedro Solbes, blamed excessive tipping for the increase of the inflation.[47]

Sweden

Tipping (Dricks) is commonly not expected, but is practiced to reward high quality service or as a kind gesture. Tipping is most often done by leaving small change on the table or rounding up the bill. This is mostly done at restaurants (less often if payment is made at the desk) and in taxis (some taxis are very expensive as there is no fixed tariff, so they might not be tipped). Less often hairdressers are tipped.[48] Tips are taxed in Sweden, but cash tips are not much declared to the tax authority. Cards are heavily used in Sweden as of the 2010s, and tips paid by cards in restaurants are regularly checked by the tax authority. There are reports that restaurant owners keep card tips and that waitresses do not notice generous card tips.

Turkey

In Turkey, tipping, or bahşiş (lit. gift, from Persian word بخشش, often rendered in English as "baksheesh") is usually optional and not customary in many places. Though not necessary, a tip of 5-10% is appreciated in restaurants, and is usually paid by "leaving the change". Cab drivers usually do not expect to be tipped, though passengers may round up the fare. A tip of small change may be given to a hotel porter.[49]

United Kingdom

Golfers often tip the caddies who carry their golf clubs.

Tips of 10% are common in restaurants, but not compulsory. Sometimes, more often in London and other large cities than in other areas, a service charge may be levied, often of 12.5%.[50] Since it is a legal requirement to include all taxes and other obligatory charges in the prices displayed, a service charge is compulsory only if it is displayed, or the trader makes their presence clear verbally, before the meal.[51] Even so, if the level of service is unacceptable, and in particular it falls short of the requirements of the Supply of Goods and Services Act 1982, the customer can refuse to pay some or all of a service charge.[52]

The service charge may be included in the bill or added separately. 12.5% is reported as a common amount.[53]

Tipping for other services such as taxis and hairdressers is not expected, but tips are often given to reward good service. In some large cities tips are given to both taxi drivers and hairdressers/barbers, but again this is not expected.

North America and The Caribbean

Canada

Tipping is practiced in Canada in a similar manner to United States. Quebec provides alternate minimum wage schedule for all tipped employees. Some other provinces allow alternate minimum wage schedule for "liquor servers".[54]

According to Wendy Leung from The Globe and Mail, it is a common practice in restaurants to have servers share their tips with other restaurant employees, a process called "tipping out."[55] Another newspaper refers to this as a tip pool.[56]

"Tipping out the house (the restaurant) is occasionally explained as a fee for covering breakage or monetary error[s]."[56]

A Member of the Ontario Provincial Parliament, Michael Prue, has introduced a Bill in the Ontario Legislature regarding tipping.[57] On December 7, 2015 it was reported that "Ontario is banning employers from taking a cut of tips that are meant for servers and other hospitality staff." "The Protecting Employees' Tips Act makes it illegal for employers "...to withhold their employees' tips, except temporarily if they are pooling all of the gratuities to redistribute them among all employees."[58]

Canadian Federal tax law considers tips as income. Workers who receive tips are legally required to report the income to the Canada Revenue Agency and pay income tax on it. In July 2012, The Star reported that CRA is concerned with tax evasion. An auditing of 145 servers in four restaurants by CRA mentioned in the report uncovered that among 145 staff audited, CDN $1.7million was unreported.[59] In 2005, The CRA was quoted that it will closely check the tax returns of individuals who would reasonably be expected to be receiving tips to ensure that the tips are reported realistically.[60]

Caribbean

Tipping in the Caribbean varies from island to island. In the Dominican Republic, restaurants add a 10% gratuity and it is customary to tip an extra 10%. In St. Barths, it is expected that a tip be 10% to 15% if gratuity isn't already included.[61]

Mexico

A taxi driver waiting for customers

Workers in small, economy restaurants usually do not expect a significant tip.[62] However, tipping in Mexico is common in larger, medium and higher end restaurants. It is customary in these establishments to tip not less than 10% but not more than 15% of the bill as a voluntary offering for good service based on the total bill before value added tax,[63] "IVA" in English, VAT. Value added tax is already included in menu or other service industry pricing since Mexican Consumer Law requires the exhibition of final costs for the customer. Thus, the standard tip in Mexico is 11.5% of the pre-tax bill which equates to 10% after tax in most of the Mexican territory, except in special lower tax stimulus economic zones.[63][64]

A gratuity may be added to the bill without the customer's consent, contrary to the law,[65] either explicitly printed on the bill, or by more surreptitious means alleging local custom, in some restaurants, bars, and night clubs. However, in 2012, officials began a campaign to eradicate this increasingly rampant and abusive practice not only due to it violating Mexican consumer law, but also because frequently it was retained by owners or management.

If a service charge for tip ("propina" or "restaurant service charge") is added, it is a violation of Article 10 of the Mexican Federal Law of the Consumer and Mexican authorities recommend patrons require management to refund or deduct this from their bill. Additionally, in this 2012 Federal initiative to eliminate the illegal add-ons, the government clarified that contrary even to the belief of many Mexicans, that the Mexican legal definition of tips ("propinas") require it be discretionary to pay so that an unsatisfied client is under no obligation to pay anything to insure the legal definition of a tip is consistent with the traditional, cultural definition, and going as far to encourage all victims subject to the increasing illicit practice report the establishments to the PROFECO, the Office of the Federal Prosecutor for the Consumer, for prosecution.[66]

United States

A server at Luzmilla's restaurant.

Tipping is a practiced social custom in the United States. Tipping by definition is voluntary - at the discretion of the customer. In restaurants offering traditional table service,[67] a gratuity of 15% of the amount of a customer’s check is customary when good service is provided. Buffet-style restaurants where the server brings only beverages, 10% is customary.[68] Higher tips may be given for excellent service, and lower tips for mediocre service. In the case of bad or rude service no tip may be given, and the restaurant manager may be notified of the problem.[69] Tips are also generally given for services provided in golf courses, casino, hotels, concierge, food delivery, taxis, spa and salons.[70] This etiquette applies to bar service at weddings and any other event where one is a guest as well. The host should provide appropriate tips to workers at the end of an event; the amount may be negotiated in the contract.[71] Tipping is not required for fast food restaurants, take-out orders, and coffee houses.

The Fair Labor Standards Act defines tippable employees as individuals who customarily and regularly receive tips of $30 or more per month. Federal law permits employers to include tips towards satisfying the difference between employees' hourly wage and minimum wage, although some states and territories provide more generous provisions for tipped employees. For example, laws in Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington, and Guam specify that employees must be paid the full minimum wage of that state/territory (which is equal or higher than the federal minimum wage in these instances) before tips are considered.[72]

A tip pool cannot be allocated to employers, or to employees who do not customarily and regularly receive tips. These non-eligible employees include dishwashers, cooks, chefs, and janitors.[73]

Waiters at the King David Hotel.

There is only limited information available on levels of tipping. A study at Iowa State University provided data for a suburban restaurant surveyed in the early 1990s. The mean tip was $3.00 on a mean bill of $19.78. As such, the mean tip rate was 16.1%, and the median tip rate was about 15%.[74] In a 2003 research study at Brigham Young University, the sample restaurants had an average tip percentage ranging from 13.57 to 14.69% between 1999-2002.[75]

Service charges

Service charges are mandatory payments, typically added by caterers and banqueters. A service charge is not to be confused with a tip or gratuity which is optional and at the discretion of the customer. Restaurants commonly add it to checks for large parties.[76] Some bars have decided to include service charge as well, for example in Manhattan, New York.[77] Disclosure of service charge is required by law in some places, such as in State of Florida[78] A standard predetermined percent, often ~18%, is sometimes labeled as a "service charge".[79]

History

Until the early 20th century, Americans viewed tipping as inconsistent with the values of an egalitarian, democratic society.[80] Also, proprietors regarded tips as equivalent to bribing an employee to do something that was otherwise forbidden, such as tipping a waiter to get an extra large portion of food.[80] The introduction of Prohibition in 1919 had an enormous impact on hotels and restaurants, who lost the revenue of selling alcoholic beverages. The resulting financial pressure caused proprietors to welcome tips, as a way of supplementing employee wages.[81] Contrary to popular belief, tipping did not arise because of servers' low wages, because the occupation of waiter (server) was fairly well paid in the era when tipping became institutionalized.[81]

In spite of the trend toward tipping as obligatory behavior, six states, mainly in the South, passed laws that made tipping illegal. Enforcement of anti-tipping laws was problematic.[80] The earliest of these laws was passed in 1909 (Washington), and the last of these laws was repealed in 1926 (Mississippi).[80] Some have argued that "The original workers that were not paid anything by their employers were newly freed slaves" and that "This whole concept of not paying them anything and letting them live on tips carried over from slavery."[82]

Taxation
Hair stylists are among the service workers who are often tipped for their service in the US.

Tips are considered income. The entire tip amount is treated as earned wages with the exception of months in which tip income was under $20.[83] Research finds that consistent tax evasion by waitstaff due to fraudulent declaration is a concern in the US. According to the IRS, between 40% and 50% of tips to waiters are not reported for taxation.[84]

An IRS audit was triggered by major discrepancies between employees' declared tip percentage and the percentage from credit card slips maintained by the business. It was discovered that employees of Fior D'Italia in San Francisco were significantly under-reporting their tip income. The average tip amount as computed by IRS through calculating the average of credit card slips for 1991 and 1992 were 14.4 and 14.29% respectively. IRS applied those rates toward all sales including cash sales to estimate the actual tip. Reported tip amount was subtracted from the estimated amount to estimate tax evasion. Based on these calculations, Fior D'Italia underreported tip income by 38.8% in 1991 and 40.0% in 1992.[85]

US federal employees

The US Government recognizes tips as allowable expenses for federal employee travel.[86] However, US law prohibits federal employees from receiving tips under Standards of Ethical Conduct. Asking for, accepting or agreeing to take anything of value that influences the performance of an official act is not allowed. [1][87]

South America

Bolivia

Service charges are included with the bill. A tip of around 5% or so is sometimes given, and is considered polite.[88]

Paraguay

Service charges are included with the bill, and tipping is uncommon.[88]

Oceania

Australia

A young man (in white) caddies the golf clubs of an older golfer.

Tipping is not expected or required in Australia. This is because the federal government protects the rights of workers, by providing them with a minimum wage. In Australia this is reviewed yearly, and as of 2012 : it was set at A$16.37 per hour (A$20.30 for casual employees)[89] and this is fairly standard across all types of venues.

Tipping at cafes and restaurants (especially for a large party), and tipping of taxi drivers and home food deliverers is again, not required or expected. However many people tend to round up the amount owed while indicating that they are happy to let the worker "keep the change".

There is no tradition of tipping somebody who is just providing a service (e.g. a hotel porter). Casinos in Australia—and some other places—generally prohibit tipping of gaming staff, as it is considered bribery. For example, in the state of Tasmania, the Gaming Control Act 1993 states in section 56 (4): "it is a condition of every special employee's licence that the special employee must not solicit or accept any gratuity, consideration or other benefit from a patron in a gaming area."[90]

There is concern that tipping might become more common in Australia.[91]

New Zealand

Tipping is not a traditional practice in New Zealand, though has become more prevalent in recent years – especially in finer establishments. Tipping in New Zealand is likely the result of tourists visiting from tipping cultures (such as the United States of America) who may follow their own tipping customs. Where tipping does occur among New Zealanders it is usually to reward a level of service that is in excess of the customer's expectations, or as an unsolicited reward for a voluntary act of service. A number of websites published by the New Zealand government advise tourists that "tipping in New Zealand is not obligatory – even in restaurants and bars. However, tipping for good service or kindness is at the discretion of the visitor".[92] A Sunday Star-Times reader poll in 2011 indicated 90% of their readers did not want tipping for good service to become the norm in New Zealand[93]

Perspectives

Inconsistency of percentage-based gratuities

Crossing sweepers cleared the way for rich people to cross the road without dirtying their clothes, and they were normally tipped for this service. London, 1893. The modern version of this service are squeegee kids who clean windshields during the time vehicles are stopped for traffic lights.

In countries where tipping is the norm, such as in the US, Canada, and in a few countries in Western Europe, some employers pay workers with the expectation that their wages will be supplemented by tips. Some have criticized the inherent "social awkwardness" in transactions that involve tipping, the inconsistency of tipping for some services but not similar ones, and the irrationality of basing tips on price, rather than the amount and quality of service (a customer pays a larger tip to a server bringing him a lobster rather than a hamburger, for example).[94]

Discrimination

Older and younger female staff receive lower gratuities than women in their 30s even when they perform identical tasks. Waitresses that are more attractive receive larger gratuities; but this is not as pronounced for waiters. Waitresses that are slender, are blonde, or have large breasts also receive larger tips.[6]

Poor tippers

Some categories of people have been shown to statistically be poor tippers.[6]

Cases where no gratuity is expected

Tipping may not be expected when a fee is explicitly charged for the service.[3]

In countries such as Australia and Japan where no tipping is provided, the service is found to be as good as in America.[7]

Mandatory tipping

A service charge is sometimes added to bills in restaurants and similar establishments. Attempts to hide service charge by obstructing the line on the receipt have been reported.[95]

In the United States, criminal charges were dropped in two separate cases over non-payment of mandatory gratuities. Courts ruled that automatic does not mean mandatory.[96][97] Some cruise lines charge their patrons $10/day in mandatory tipping; this does not include extra gratuities for alcoholic beverages.[98]

Bribery and corruption

Bribery and corruption are sometimes disguised as tipping. In some developing countries, police officers, border guards, and other civil servants openly solicit tips, gifts and dubious fees using a variety of local euphemisms.

Economic theory

An academic paper by Steven Holland calls tipping "...an effective mechanism for risk sharing and welfare improvement" which reduces the risk faced by a service customer, because the customer can decide whether or not to tip.[99]

Tipping is sometimes given as an example of the principal-agent problem in economics. One example is a restaurant owner who engages servers to act as agents on his or her behalf.[4] In some cases, "[c]ompensation agreements [can] increase worker effort...if compensation is ...tied to the firm's success"; one example of such a compensation agreement is waiters and waitresses who are paid tips. [5]

Studies show however that, in the real world, the size of the tip is only weakly correlated with the quality of the service, and other effects dominate.[6]

See also

References

  1. 1 2 "5. Administrative Personnel". Code of Federal Regulations. January 1, 2008. Retrieved May 11, 2014.
  2. ↑ Mark, Monica (August 8, 2013). "Nigerian sergeant sacked for attempted bribe-taking caught on cameraphone". The Guardian (Lagos). Retrieved May 11, 2014.
  3. 1 2 Bly, Laura (August 25, 2005). "The tipping point: Will service charges replace voluntary gratuities?". USA Today. Retrieved May 11, 2014.
  4. 1 2 Steen Videbeck. THE ECONOMICS & ETIQUETTE OF TIPPING. 2004 Available online at: http://cis.org.au/images/stories/policy-magazine/2004-summer/2004-20-4-steen-videbeck.pdf Accessed on June 2, 2013.
  5. 1 2 Robert J. Graham. Managerial Economics For Dummies. John Wiley & Sons, Feb 14, 2013
  6. 1 2 3 4 Should Tipping be Banned? Full Transcript
  7. 1 2 The New Yorker, Check, Please By James Surowiecki
  8. 1 2 Douglas, Harper. "tip". Online Etymology Dictionary. Retrieved 11 November 2013.
  9. ↑ "tip, v.4" Oxford English Dictionary. 2nd ed. 1989. Oxford University Press. ISBN 0-19-861186-2.
  10. ↑ Hendel, John. "The Case Against Tipping" in The Atlantic. October 1, 2010. http://www.theatlantic.com/health/archive/2010/10/the-case-against-tipping/63913/ Accessed on August 3, 2015.
  11. 1 2 THE FOOD ISSUE Why Tip? By PAUL WACHTER. The New York Times. Published: October 9, 2008 http://www.nytimes.com/2008/10/12/magazine/12tipping-t.html?hp&_r=0 Accessed on June 6, 2013
  12. ↑ "Tronc Schemes". HMRC. 28 June 2011. Retrieved 6 February 2012.
  13. ↑ "HMRC E24(2010): Tips, Gratuities, Service Charges, and Troncs" (PDF). HMRC. Retrieved 6 February 2012.
  14. ↑ Cindy Loose, Washington Post (2006-04-27). "A few tips on handling gratuities worldwide". Sfgate.com. Retrieved 2012-02-06.
  15. ↑ Loose, Cindy (27 April 2006). "A few tips on handling gratuities worldw". Washington Post. Retrieved 11 May 2014.
  16. ↑ Oliver Strand (1 May 2014). "How Japan Has Perfected Hospitality Culture". The Wall Street Journal. Retrieved 25 February 2015.
  17. ↑ "What to tip when travelling". Television New Zealand. AAP. 30 August 2005. Retrieved 23 November 2011.Archived May 10, 2015, at the Wayback Machine.
  18. ↑ "South Korea: Tipping & Etiquette". TripAdviser. 2 October 2010. Retrieved 15 October 2015.
  19. ↑ Paul Stafford (16 June 2011). "Tipping etiquette in Korea". Korea: An Introduction. Retrieved 15 October 2015.
  20. ↑ Kate Schneider (21 August 2013). "Where tipping is actually considered rude". News.com.au. Retrieved 15 October 2015.
  21. ↑ Singapore. "Singapore". lonelyplanet. Retrieved 2012-08-11.
  22. ↑ http://travelspedia.com/East-Europe/Albania/2344.html
  23. ↑ MojPosao.net and Slobodna Dalmacija: Napojnice u hrvatskim restoranima i lokalima (in Croatian) http://www.moj-posao.net/Vijest/62430/Napojnice-u-hrvatskim-restoranima-i-lokalima/3/
  24. ↑ http://www.d-r-c.dk/artikel.php?p_id=217
  25. ↑ geographica.org, Travel Tips for Denmark
  26. ↑ http://gofrance.about.com/od/travelplanning/a/tippinginfrance.htm
  27. ↑ http://www.tripadvisor.com/Travel-g187070-s606/France:Tipping.And.Etiquette.html
  28. ↑ Restaurant Tipping in Germany (USA Today)
  29. ↑ http://www.deutschland-rundet-auf.de/
  30. ↑ http://www.gesetze-im-internet.de/estg/__3.html
  31. ↑ "Online Etymology Dictionary". Etymonline.com. Retrieved 2013-01-27.
  32. ↑ "Hungary: Tipping & Etiquette". TripAdvisor.com. Retrieved 11 May 2014.
  33. ↑ "Tipping in Iceland". Whygoiceland.com. 2011-02-15. Retrieved 2012-02-06.
  34. ↑ Rick Steves' Ireland 2008. Books.google.com. Retrieved 2012-02-06.
  35. ↑ "Guide lines on tipping in Italy". Tours-italy.com. Retrieved 2012-02-06.
  36. ↑ Regional Law 21 (November 29, 2006), article 16 paragraph 3 Archived January 1, 2011, at the Wayback Machine.
  37. ↑ "Mance in declino, segno dei tempi – IL SALVAGENTE – quotidiano on-line dei consumatori". Ilsalvagente.it. Retrieved 2012-02-06.Archived August 5, 2014, at the Wayback Machine.
  38. ↑ http://reisetips.nettavisen.no/den-store-guiden-til-tipsing/. Missing or empty |title= (help)
  39. ↑ http://www.nettavisen.no/na24/3613016.html. Missing or empty |title= (help)
  40. ↑ http://www.dinside.no/816088/ikke-tips. Missing or empty |title= (help)
  41. ↑ http://www.ba.no/nyheter/article6756745.ece. Missing or empty |title= (help)
  42. ↑ http://www.aftenposten.no/jobb/--Driks-gar-utover-yrkesstoltheten-6743530.html. Missing or empty |title= (help)
  43. ↑ "Inside Slovenia: Tipping & Etiquette." TripAdvisor. Retrieved 2007-04-22.
  44. ↑ "Slovenia Travel Information: Fact Sheet." Concierge.com. Retrieved 2007-04-22.
  45. ↑ "El Economista
  46. ↑ "20 Minutos
  47. ↑ "Solbes achaca la inflación a que no interiorizamos lo que significa un euro" El Mundo, 15 December 2007
  48. ↑ Tipping in Sweden How much tip should you leave in Sweden?
  49. ↑ "Tipping in Turkey"
  50. ↑ "Tipping in Europe". Auto Europe. Retrieved 7 July 2015.
  51. ↑ "Restaurant service is poor". Citizens Advice. 8 May 2014. Retrieved 23 Feb 2015.
  52. ↑ "Do I have to pay a service charge if the service is poor?". Which?. Retrieved 23 Feb 2015.
  53. ↑ Davis, Bernard; Lockwood, Andrew; Alcott, Peter; Pantelidis, Ioannis. Food and beverage management (5th ed.). Milton Park, Abingdon, Oxon: Routledge. p. 31. ISBN 0415506905.
  54. ↑ "Current And Forthcoming Minimum Hourly Wage Rates For Young Workers And Specific Occupations".
  55. ↑ Should restaurants be barred from taking a share of a server’s tip? WENDY LEUNG, The Globe and Mail. Published Tuesday, Jun. 12 2012 http://www.theglobeandmail.com/life/food-and-wine/food-trends/should-restaurants-be-barred-from-taking-a-share-of-a-servers-tip/article4253753/ Accessed on May 31, 2013.
  56. 1 2 The Star (Toronto) http://www.thestar.com/life/2009/04/16/government_has_no_ordinance_in_tussle_for_servers_tips.html. Missing or empty |title= (help)
  57. ↑ Restaurant Tipping: Ontario NDP Wants Ban On Restaurants Skimming Tips. By Keith Leslie, The Canadian Press Posted: 06/11/2012 http://www.huffingtonpost.ca/2012/06/11/restaurant-tips-ndp-ontario-labour-law_n_1587182.html Accessed on June 7, 2013.
  58. ↑ http://www.cbc.ca/news/canada/windsor/ontario-employers-servers-tips-1.3354563
  59. ↑ "Wait staff hiding tips from the taxman, auditors find | Toronto Star". Thestar.com. 2012-07-08. Retrieved 2014-01-22.
  60. ↑ McCracken, D.L. "Revenue Canada to Tax Wait Staff's Tips." HalifaxLive.com. 2005-05-23.
  61. ↑ "Tipping Etiquette and Tipping Guidelines for Restaurants Around the World - Guidelines for Tipping Etiquette in Restaurants Around the World". Culinarytravel.about.com. 2013-12-18. Retrieved 2014-01-22.
  62. ↑ "Practical travel information on Money and costs in Mexico City - Lonely Planet Travel Information". Lonelyplanet.com. Retrieved 2014-01-22.
  63. 1 2 "Reporte Especial: ¿Das propina? Revista del Consumidor TV 10.1". YouTube. Retrieved 2014-01-22.
  64. ↑ "Mexico Travel Guide tips, Mexico City tourist information, visa requirements, work visas, student accommodation, food, eating on a budget". Learn4good.com. 2005-01-01. Retrieved 2014-01-22.
  65. ↑ "Qué hacer si te quieren cobrar la propina [Revista del Consumidor Webcast 211". YouTube. 2013-02-28. Retrieved 2014-01-22.
  66. ↑ "QuĂŠ hacer si… Te quieren cobrar la propina | Revista del Consumidor en LĂnea". Revistadelconsumidor.gob.mx. Retrieved 2014-01-22.
  67. ↑ "Everything you need to know about how restaurant tipping works". Chicago Tribune. Retrieved 2014-09-01.
  68. ↑ "Tipping for a Buffet - Peggy Post Etiquette". Good Housekeeping. Retrieved 2014-01-22.
  69. ↑ "Rules for Restaurant Gratuities | Chron.com". Smallbusiness.chron.com. Retrieved 2014-01-22.
  70. ↑ http://www.irs.gov/pub/irs-pdf/p3148.pdf
  71. ↑ Anastasio, Janet; Bevilaqua, Michelle (2000), The Everything Wedding Checklist, F+W Publications, p. 21, ISBN 978-1-58062-456-5
  72. ↑ "Minimum Wages for Tipped Employees". Department of Labor. Retrieved 2014-04-04.
  73. ↑ <url>http://www.dol.gov/whd/regs/compliance/whdfs15.pdf FLSA US DoL</url>
  74. ↑ "STAT 503 Case Study 1: Restaurant Tipping" (PDF). Retrieved 2012-09-27.
  75. ↑ (PDF) http://web.archive.org/web/20110719160219/http://orca.byu.edu/Journals/2003%20Final%20reports/_msm/jackson.pdf. Archived from the original (PDF) on July 19, 2011. Retrieved December 29, 2010. Missing or empty |title= (help)
  76. ↑ Restaurant Business 87: 18. 1988. Missing or empty |title= (help)
  77. ↑ "High-End Manhattan Bars Institute Mandatory Tipping". CBS New York. Retrieved 2011-06-02.
  78. ↑ Florida statute 509.214
  79. ↑ Bly, Laura (2005-08-26). ""The tipping point: Will service charges replace voluntary gratuities?", USA Today. 2005-08-25". Pqasb.pqarchiver.com. Retrieved 2012-02-06.
  80. 1 2 3 4 Segrave, Kerry (1998). Tipping: An American social history of gratuities. Jefferson, North Carolina: McFarland & Company. ISBN 0786403470.
  81. 1 2 Mentzer, Marc S. (September 2013). "The payment of gratuities by customers in the United States: An historical analysis". International Journal of Management (UK) 30 (3): 108–120. ISSN 0813-0183.
  82. ↑ Shanker, Deena (9 February 2016). "How American tipping grew out of racism". Quartz (publication). Retrieved 9 February 2016.
  83. ↑ "Publication 3148, A Guide to Tip Income Reporting for Employees Who Receive Tip Income" (PDF). Internal Revenue. Retrieved 20012-09-27. Check date values in: |access-date= (help)
  84. ↑ IRS Bulletin No. 2002–47, November 25, 2002, presents some examples of tipping discrepancies that led to some investigations.
  85. ↑ "United States V. Fior D’Italia, Inc". Law.cornell.edu. Retrieved 2012-02-06.
  86. ↑ GSA
  87. ↑ "USDOJ: JMD: Departmental Ethics Office: Regulations, Authorities & Reference Materials: Do It Right". Justice.gov. 1993-01-20. Retrieved 2014-01-22.
  88. 1 2 DHL. "Cultural Tips." How to Ship Internationally.
  89. ↑ "National minimum wage – Pay – Fair Work Ombudsman". Fairwork.gov.au. Retrieved 2012-02-06.
  90. ↑ "Tasmanian Gaming Control Act 1993". Thelaw.tas.gov.au. Retrieved 2012-02-06.
  91. ↑ CNBC: "Is Australia at a tipping point, literally?" By Katie Holliday 19 Nov 2013
  92. ↑ "Tipping and service charges". immigration.govt.nz. 2006-04-10. Retrieved 2012-08-09. External link in |work= (help)
  93. ↑ "A tip on how to get good service". stuff.co.nz. Retrieved 2012-06-09.
  94. ↑ "The mechanics of tipping US-style". BBC News. 2009-03-07. Retrieved 2010-03-28.
  95. ↑ Trevor White (2006-08-20). "newspaper: Confessions of a restaurant critic". London: Guardian. Retrieved 2012-02-06.
  96. ↑ Johnson, Danielle (November 24, 2009). "Philadelphia: Theft Charges Dropped Against No-Tip Couple". NBC10. Retrieved May 11, 2009.
  97. ↑ "A Mandatory Gratuity Is Just a Tip, and Thus Not Mandatory, a Prosecutor Says". New York Times. September 25, 2004. Retrieved May 11, 2014.
  98. ↑ Bly, Laura (August 26, 2005). "Will mandatory service charges replace voluntary gratuities?". USA Today. Retrieved June 2, 2011.
  99. ↑ Steven J. Holland. "Tipping as risk sharing." The Journal of Socio-Economics. Volume 38, Issue 4, August 2009, Pages 641–647

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