UK reaches tipping point on service charges

Time for change? Some estimates suggest tips are now worth $100bn per year in the USA alone.

The British government is planning to force restaurants to let staff keep tips and to make it clear that service charges are optional. Some say that it is now time to ban tipping entirely.

‘So many times I went home in tears,’ tweeted Amy Grimshaw, ‘because I owed you money to work the shift.’

Amy was addressing her former employer, the Las Iguanas restaurant chain, last year. The company had required her to pay it 3% of her customers’ bills each night. If she had not made enough in tips – small payments from customers to thank her for her service – she would make up the shortfall herself.

Las Iguanas changed its policy after 89,000 people signed a petition protesting against it. But a campaign was underway against several major chains who were docking ‘administration fees’ from their staff’s tips – or not giving them their tips at all.

Yesterday, the UK government published plans to ban such practices. ‘Too many people were finding tips weren’t going to the people they intended,’ said Sajid Javid, the business secretary. He also wants restaurants to make clear to customers that tipping is voluntary. He says he is prepared to use legislation to enforce change.

Tipping is thought to have originated in the alehouses of Tudor and Stuart England, where customers would pay staff a small fee ‘to insure promptitude’. Now, the country which pioneered service charges has a confused relationship with them: one recent survey rated British people as the second worst tippers in the world.

Americans were seen as the best. In the 19th and early 20th centuries, the USA saw strong resistance to a practice associated with traditional European class structures. But in the last century, it has become common to tip service staff — tipped employees’ basic cash wage can be as low as $2.13 per hour.

But yesterday, food critic Jay Rayner said tipping had ‘outlived its usefulness’ and waiters should receive a rise in their basic wage instead. In Japan, Korea and China, tips are often seen as unnecessary or offensive. In Taiwan, the tourist board dropped a plan to encourage a tipping culture amid a local outcry in 2013.

So is tipping a relic of a class-ridden society, or the product of a vibrant system of free exchange?

Tipped off

Critics say tipping puts staff in an insecure, servile position, at the whim of customers’ shallow judgements. They encourage customers to believe money entitles them to anything and staff to serve some clients better than others. Staff feel underpaid; customers feel overcharged. A decent basic wage would be simpler and better.

Tipping is a hallmark of a free society, respond supporters. Staff are free to work harder to earn more. Customers are free to reward the service they receive as they see fit. Tips encourage staff to work for their money, not expect it, meaning we all benefit from a more personalised, higher-quality service.

You Decide

  1. Would you prefer to be paid entirely by a fixed wage or try to earn tips?
  2. Should we now abandon the tipping culture?

Activities

  1. Imagine you run a restaurant and the owners asked you to set the rules on tipping for customers. Write down what your rules would be.
  2. Research and summarise four different attitudes to tipping that currently exist in four different countries.

Some People Say...

“I wish I had the nerve not to tip”

What do you think?

Q & A

I don’t work in a restaurant. So what if a few people get paid a bit differently?
You could take a job in a service industry within the next few years — when you need money and have few qualifications, it is common to work as a waiter, work behind a bar, or work in a hotel. All of these jobs require you to serve the public. Even if you do not do these jobs, the way people are paid reflects wider values and attitudes in society. For example, should people who do the same job be paid equally, or rewarded according to effort?
But does the government’s involvement matter to me?
The government is planning to force businesses to pay tips to staff. If you work as a waiter, you may feel this is helpful support — but if you plan to run a business in future, you may not appreciate the interference.

Word Watch

3%
Staff in London had to pay 5.5%.
Policy
Las Iguanas said the policy did not apply to tables on which no tip had been left. But staff said this was being interpreted differently in different branches.
Legislation
Under the current code of practice, restaurants can choose to apply guidelines voluntarily. Javid says this ‘hasn’t worked’.
Survey
According to the Global Tipping Index. Staff in one in five bars (in a sample of 105 bars in nine countries) said British people were among their worst tippers.
Second
France came first.
Resistance
Six US states banned tipping between 1909 and 1926.
Class
‘Tipping, and the aristocratic idea it exemplifies, is what we left Europe to escape,’ wrote William Rufus Scott, a publisher of children’s books, in 1916.
Service staff
In 1993, staff in the USA commonly received tips in more than 30 professions — more than anywhere else in the world — according to a study by academics at Cornell university.
$2.13
Currently worth £1.45. The minimum basic combined wage and tip is $7.25 per hour; many states have higher minimum wages than that.

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