Seriously folks, get this tipping thing right

Restaurants could be stopped from adding a discretionary service charge to bills under Government plans to remind consumers that they do not have to tip when eating out.

Sajid Javid, the Business Secretary, is today launching a consultation on tipping amid concerns that restaurants are confusing customers by not being transparent about the charges and who actually receives any tips.

One option under consideration is to prevent restaurants “from suggesting any specific discretionary payments” to make it an “opt-in decision” for customers.

Many restaurants add a 10 or 15 per cent service charge to their bills. Ministers are concerned that this often leads to “double tipping” because customers do not notice that they have already paid a service charge before leaving cash for their waiter.

A service charge is not a tip: a tip is not a service charge.

A service charge (“10% has been added to your bill”) is the property of the business, the company. It is subject to VAT, can be distributed absolutely however the management want and if it goes to staff pays income tax and both sets of NI.

A tip is a tip. It belongs to the waiting staff and to them only. It is not subject to VAT, it pays income tax and neither set of NI.

They are very different things. They are legally distinct as shown by the difference in taxation. So if people are going to discuss this issue then they need to understand what the fuck they’re talking about.

The “suggested service charge” you sometimes see on a bill is, legally, a tip. Because you can say that you don’t want to pay it. And so, you don’t. That puts it into that tip legal category, not the service charge one.

37 thoughts on “Seriously folks, get this tipping thing right”

  1. “…Government plans to remind consumers that they do not have to tip when eating out.”

    Are there government plans to remind us to always take a clean handkerchief with us when we go out too?

    Jeez…

  2. Well said, JuliaM.

    I thought it was more me getting old, but increasingly I feel a malignant presence peering over my shoulder like some evil Benny Hill, waiting to smack me round the head to cajole me into acting in accordance with its preferred template.

    No wonder most of these bastards want to stay in the EU, where they can earn the sort of money usually reserved for serious people.

  3. Well, you can understand why people might be confused. Is there another sector where the ‘service’ element of the service is added as a fixed proportion of the ‘non-service’? (Whatever the ‘non-service’ element in a service industry is supposed to be, eludes me)

  4. And if the government is ‘nannying’ on this, maybe – on this particular issue – it needs to. If restaurants are really employing ‘nudge’ tactics by sticking the discretionary tip as an item on the tab- knowing full well the Brit reluctance to quibble over restaurant bills – they need stamping on.
    Thank heavens I live in countries where tipping is entirely voluntary & unexpected.

  5. So Much For Subtlety

    1. The government has got so big they are interfering in things they shouldn’t, or
    2. The government is unable or unwilling to do their basic roles (see Rotherham) and so they are engaging in displacement activity, or
    3. Both of the above?

    Tough choice isn’t it?

  6. This is one area that New Zealand has got it right – the only time that you ever tip is if the server has gone absolutely above and beyond the call of duty. In this circumstance you may leave them $10.

    I’ve only ever tipped once here: we had some friends over and went out for dinner on their last night. Discussion turned to various Kiwi staples and what they had eaten during their holiday and we discovered that they had missed out on pavlova. Easily rectified as pav was on the pudding list; but, alas, they had run out.

    “Never fear”, said the waiter, “I will ensure that your friend eats pavlova before the night is out” (I may not have recalled the exact words). The waiter then visited four nearby restaurants and brought back, on another restaurant’s plate, a delicious slice of pav for them. Even then he seemed shocked to be given ten bucks for his troubles.

    Honestly, the easy solution to this whole tipping malarkey is to include the staff’s wages in the price!

  7. On the occasions I’ve worked in tipping industries, the tips have been bloody useful. Not as part of a subsidy for wages, but because they get divided up at the end of each shift providing a bit of cash ahead of payday. Means the wage can go on bills and tips on walking around money.

  8. “Whatever the ‘non-service’ element in a service industry is supposed to be, eludes me”

    The cook in a restaurant is the closest thing many areas have to an assembly line. In fact when I think about it, it is an assembly line. Raw materials come in, get transformed adding value, then are sold to the customer. The only question now is how long it will take for the government to change the official definition.

  9. Bloke in Spain,

    I hate it when restaurants do this, and I generally ask them to remove it. And then they don’t get a tip. And I’ll never go back. London’s different because everyone seems to do it in London, but out here in the sticks, no.

    It’s a dodgy practice, hidden small print. If you want 10% on your bill, add 10% in. It’s not difficult.

  10. But whatever your view on the practice of tipping, service charges or paying the bill by doing the washing up, I think we should all be able to agree that it’s none of the fucking government’s fucking business!!

    If you don’t like a restaurant’s tipping policy – or prices, or cleanliness or food – stop fucking eating there!

    But on no account should you lobby the fucking government to force an establishment to change iot’s practices to suit your idea of what a business should do!!!

  11. If I want to tip the waiter/ess I will do so or not do so as I see fit and the state and local custom can go fuck themselves alike.

    BluLab arrogance is off the scale. Campaign for Treason and tell you what you should be tipping.

    I’ll tip the Hangman tho’–By Christ I will. To punch each BluLab hack in the face after he has put the black bag over their head.

    Send ’em off with a surprise so to speak.

  12. Kevin B,

    “But whatever your view on the practice of tipping, service charges or paying the bill by doing the washing up, I think we should all be able to agree that it’s none of the fucking government’s fucking business!!”

    Actually, I think things like businesses deceiving consumers about prices probably is the job of government, and service charges are deliberately designed to deceive consumers.

  13. Bloke in North Dorset

    A pernicious practice started in London pubs around Marble Arch, and possibly elsewhere, when I was staying in the area for work reasons.

    If you went to the bar and ordered your own food and then collected it, possibly because you were sitting at the bar, you still got whacked with a “voluntary” service charge, even though it wasn’t mentioned on the menu.

    I don’t object when I have waiter service, but this really wound me up and I had a big argument with them before deducting it and never going back. I also left comment on the various recommendation websites and at the service club I stayed at.

  14. The whole custom of tipping is entirely pernicious and derives almost entirely from US F&B firms trying to simultaneously cheat their customers and their staff.

    A bar or restaurant customer should get a bill with a single, non-discretionary number on it. The staff should get at least minimum wage.

    Any tip over and above the bill should not be solicited; if the customer wants to leave a tip for either a single member of staff or a trounce administered by the restaurant, fair enough.

    It can’t be any coincidence that 20% ‘usual’ tips in the US lead to shitty service while 0% tips in Japan get you excellent service.

  15. “Better solution? Educated customers.”

    Perhaps some customer education that they’re not legally required to pay the entirety* of restaurant bills would be popular with the restauranting industry?

    *Any price is an “offer to treat”. (Why, if a store inadvertently underprices an item, they’re not obliged to sell it to you at the marked price). With most things, you’re agreeing the price in the full knowledge of what’s being offered. But with a restaurant, of course, you don’t know what the food or service is going to be like, until you’ve enjoyed (or not) it. So you’re quite within your rights to offer to pay what you consider a reasonable sum for what’s been received & invite them to sue you for the balance.

  16. “(Why, if a store inadvertently underprices an item, they’re not obliged to sell it to you at the marked price).”

    Unless the law has changed recently, stores ARE obliged to sell at the marked price.

    Retail staff have to be on the look out for shoppers switching price tags.

  17. Think you’re wrong BiS. The marked price has to be honoured, and you can’t refuse service either.

  18. In English law at least, usually the prices on goods in shops are ‘invitations to treat’ not ‘offers to sell’. In terms of invitations to treat there is no obligation to sell at the marked price.

  19. Jack C>

    No, you’re quite wrong – unless this has been radically changed very quietly recently. An ad is not an offer, it’s an ‘invitation to treat’ – in other words, and invitation to come in and start bargaining with the shopkeeper. To form a contract one party needs to make an offer and the other to accept it; an ad, even with prices on, is nothing more than an invitation to begin that process.

    If you pick up a mislabelled item, hand it to the cashier, and they immediately notice it’s mislabelled, they’re well within their rights to refuse to sell it at the wrong price. If, on the other hand, you take the mislabelled item to the cashier and they tell you the price is what it says on the label, they’d normally be considered to be making you an offer – which you should accept, if you want the item at what is usually a cheaper price.

  20. You don’t have to pay NI on tips?

    Why not?

    (NB I know this is a purely hypothetical question, but even so, surely legally it’s part of your income, so…)

  21. Andrew>

    Good question. Normally NI is paid on ‘earned income’ but not on ‘unearned income’.

  22. JuliaM,

    This isn’t about educating customers. People have expectations about what something might mean in terms of a contract and you have to state deviations up front. And we do that because it’s more efficient for trade to tell people writing contracts that they have to do that rather than allowing small print and forcing people to wade through it.

    The courts already don’t allow small print clauses that aren’t standard for such a contract. So, you can write a clause like “this software is not supported for use in a nuclear power station” that anyone buying software already knows. It also covers the arse of the seller in case you do and there’s a meltdown. If you want to stipulate that it can’t be used in your clog-making business, you have to put that upfront in your contract.

    And this all has no cost to a business that’s trading honestly. It’s not onerous to just put 10% on the price, or to put “10% service charge” in large letters just above and below the menu items.

  23. It’s an arms race, sort-of. Pub next door starts charging 20% spurious service charge, sooner or later I have to do the same or they steal all my best staff and out-bid me on rent. An arms limitation treaty is required.

    Like the EU roaming debate, it takes a strange kind of liberal to favour being ripped off.

  24. Andrew M>

    If your neighbouring competition can charge higher prices than you overall – which is what it is – without tricking people, then you’re the one missing something. The question is whether they’re actually tricking people unfairly, or if it’s more in the line of marketing ‘tricks’ like dropping a penny off £5 prices because £4.99 looks cheaper.

    Personally, I have my doubts as to whether you can really trick someone into paying 20% more for their beers than they expected, at least without them realising – and certainly it’s unimaginable that they’d have any repeat business otherwise.

  25. Bloke in Costa Rica

    The primary function of a tip is to get good service the second you go somewhere. Wait staff and barkeeps have elephantine memories. If you are certain you are never going to return to a place then a perfectly sensible utilitarian calculus is to tip nothing. It’s a shitty thing to do though.

    Here in CR, there’s a big mandatory service charge included on bar and restaurant bills, in addition to sales tax. By law, the owners must pass this on to their staff as taxable income, and they do (otherwise El Ministerio de Hacienda will be down on them hard). But I tip 10–15% on top of that because I know how tough working in the industry is and I make a non-trivial multiple of the wages these people do. Cash tips go straight to the staff, and if I give someone a couple of hours’ wages off the books then they’re happy and I’m happy. I can afford it easily and it improves the experience for both sides of the transaction. It’s very much a positive sum deal.

  26. Dave,
    “No, you’re quite wrong – unless this has been radically changed very quietly recently. An ad is not an offer, it’s an ‘invitation to treat’”

    I’m not talking about ads.

  27. Andrew Duffin asked:
    “You don’t have to pay NI on tips? Why not? … surely legally it’s part of your income”

    The technical reason is to do with the way the legislation is framed; NI is designed around payments from an employer (because of the secondary contributions), but income tax focuses on the employee.

    But there’s no conceptual reason why they need to be different, except that our masters don’t like us to realise just how much they are taxing people on average incomes.

  28. I’m not talking about ads.

    Legally, there is no difference between a price in an advert and a price on a shelf or a price ticket. You may think that is odd, but that is the way the law currently works.

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