A transparent policy on tipping can make things easier for staff and customers alike, writes lawyer Dawn Robertson
HOW many times have you faced the dilemma of whether or not to tip your waiting staff?
Unhelpfully, there isn’t really a legal position on tipping.
It’s clear that a business cannot use tips to make an employee’s wages up to the national minimum wage.
However, beyond that, it really depends on what the business’s policy on tips is.
Having a policy on tipping is important.
More than ever customers are demanding transparency; they want to know that the waiter they tip is the one who is rewarded. Without a clear policy, do they really know what happens to the money they give?
Displaying a clear and understandable policy in your restaurant or bar is an easy way of increasing customer confidence.
Equally, the interests of employees should not be overlooked.
Ensure customers and staff know the policy by displaying it on menus.
Displaying a comprehensible policy is an excellent way of showing a responsible level of employee care.
Operating a clear policy, where employees know exactly what they are entitled to, is a great step towards securing the best calibre of employee.
So what should your policy say?
There are four key questions your policy should address:
• Whether the charge is mandatory or discretionary. In simple terms: is the diner required to pay a tip? Wording on the menu to the effect of ‘we do not add a service charge to your bill’ may suffice. You may wish to consider how the use of a discretionary charge may appear to your customer. By making the charge discretionary you hand power back to the customer whilst acknowledging the current economic climate. The 10% mandatory service charge could make that second visit less affordable.
• Whether the business deducts an amount to cover business costs. Should this be something management wishes to implement, it should be clearly communicated to both groups. Wording on the menu or in a staff handout to the effect of ‘10% of the tip you choose to leave will be retained to cover business costs’ may suffice.
However it could be beneficial if the policy went further and gave some examples of the costs incurred. For example, charges incurred processing payment and card fraud loss. Let customers and those working for you know what the money is being used for.
• Whether card tips and cash tips are distributed differently. With most people these days paying by card and adding a tip that way it really does matter how card tips are distributed. If it is the intention of management that card tips are apportioned between staff and business costs but all cash tips are to go the staff, say that. Make it clear. It is in the interest of both customers and employees.
• How the remainder is shared between the business and its workers. If wording is used to the effect of ‘10% of the tip you choose to leave will be retained to cover business costs’, make sure you say what happens to the remaining 90%.
A clear policy on tipping makes practical and commercial sense.
If it helps, use illustrative diagrams such as pie charts to show how tips are apportioned. Each group should have no doubt as to how the money is shared.
Finally to ensure customers and employees know your policy use clear displays prior to the point of purchase – on the menus, for example.
And train employees so that they are equipped with the knowledge to not only answer their own questions but those asked by customers.
A clear policy on tipping makes practical and commercial sense.
• Dawn Robertson is a partner in Tods Murray’s hospitality and leisure team.
Images – Dawn Robertson said it’s important to have a policy on tipping so staff and customers are clear about the procedure.
