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  • Writer's pictureStephan Busch


Tips and the moment of truth

How, how much and when to tip service staff is already sometimes difficult to figure out for the guests. Distribution of tips is a process hidden from the guest in which unfortunately many participate who's fingers should not be in the tip box are involved. Tip should be for staff only and this is what many guest believe. Of course we are only talking about hospitality. Common sense should tell us that it is okay to give 10% per cent to the waiter who served our dinner but to add 10% per cent cash to the police officer who served you a ticket might not be a good idea.

In hotels and restaurants it is sometimes up to the guest, sometimes a service charge is added and in some cases, like on most cruise ships tip gets charged whether you like it or not. Guest in general are unaware how the money given in good faith is shared. Except when tipping issues make it into the news. The moment of truth comes when tips get distributed. This is the moment when greedy claws appear from all sides.

Lets talk about the negative effects wrong tip distribution has. There are however many hotels & restaurants where tips get fairly distributed according to a system the whole team agreed on. And there are others.

Who is getting a share of the tips? You might be surprised.

The staff!

Well the staff should get the tips but here are some others who you will never see serving at your table.

Credit card companies.

As on every transaction they charge their percentage and this is deducted from the staff tips. More and more people prefer electronic payments and credit card companies and banks charge a fortune for actually not doing anything – the computers do the work.


The German Government for example charged a tax on every gratuity given to staff for many years. This law was abandoned a few years ago but there is still a maximum.

10% service charge. In some countries this amount goes to the staff where it belongs. In some countries , like Germany, it ends up in the pocket of the owning company that pays salary with it.The staff never sees this money. But what does a guest believe when he reads 10% service charge included? He believes he paid the service staff well. He just paid the owner and company - the staff doesn't see a penny.

Companies and Owners

Tips are unfortunately very often used to pay and offset salaries and expenses. The hospitality industry pays very low wages and Companies and owners love to take the tips to pay staff. When I worked many years ago on a cruise ships the monthly salary was 100 USD ( one hundred !) the rest was paid by tips – sometimes more – sometimes less. Salaries are everywhere low and even the staff in the Buckingham Palace was not long ago close to strike because of low salaries ( we don't know if the Queen and her guest tip - but we assume they don't). TGI Fridays had their staff now on strike as the company decided to change distribution of tips without even consulting their staff. Instead of increasing the kitchen salaries they cut the wait staff tips and distributed it to the back of house.

"Waiting staff are angry about the loss of card tips, about which the Unite union claims they were not properly consulted. Kitchen staff are said to be unhappy about being offered a share of tips, rather than a rise in basic pay."

TGI Fridays staff go on strike in UK's first dispute 20.May 2018 Sarah Butler

( The full article:

Another reason owners like to justify that they take money out of the tips is breakage. Many companies just take thousands of dollars out of the tips to replace their Chinaware. Wonder how many guests know that? Can you imagine an Audi Car dealer that lets his staff pay when the customers tires are worn out?

Companies and owners make millions putting their hands in the tip box or using it to pay salaries.

Some quotes from a recent article about tips and payments in some restaurant chains published in the observer.

“This policy is far worse than that of Pizza Express,” said Perry Phillips, London regional officer at the GMB union, which is pursuing a complaint about Turtle Bay on behalf of some of its members. “The fact that these restaurants are taking money off the waiting staff regardless of the tips they earn is unjust, unfair and downright disgraceful.”

The policy appears to be a moneyspinner for the chains. The Observerhas obtained figures that indicate that in one week this year Las Iguanas took £34,000 from its servers across all its branches from the sales charge. If this represents a typical week, over a year it would amount to £1.8m. The chain said it could not comment on the figures.

Waiters are paid the minimum wage of £6.50 an hour, which is due to rise to £6.70 in October. A general manager at one of Las Iguanas’s branches spoke to the Observeron condition of anonymity. He is charged with the job of calculating the amounts that servers owe at the end of the night and then asking them for the money. “I am lucky as the company pay the general managers well, but morally I find it totally wrong to take money off the waiting staff,” he said. “One night recently I felt terrible because a staff member had made £125 in tips and I had to ask her for £65 back.”

A Gaucho employee told the Observer that in one month they earned close to £500 in tips but, because of a combination of the two deductions, more than £400 of that was retained by the company"

Observer: Restaurants’ tipping policy ‘forces waiters to pay to work’

Chains’ rules require staff to hand over cash after the end of a shift, union claims

Tips in the Cruise industry where it is often required from the guest to pay tips even before boarding reach Millions of dollars every year. How they are shared is not up to the staff – it is up to the company.

Electronic and credit card payments allow Governments, companies and owners to dig into the staff tips. These millions are just too tempting. In times when tips were only paid in cash this was not possible. The same Governments and owners are complaining that there is no more good staff that wants to work for them. Guess why?

Once it is only left to the staff to distribute the tips there are normally no issues or arguments when it comes to distribution. Nowadays this is a rare case and of course this is frustrating for the employees.

Let’s go back to the only fair system

Governments and owners have the power to come back to the original set up so that tips reaches only the ones it is intended for. The way it is handled right now in too many places results in the guest being cheated and the staff gets cheated big time.

There are also some nice stories when it comes to tip. One is for sure the famous story when Albert Einstein left a note as a tip and this was later worth 1,5 Million in an auction.

I remember two old waiters in a Grand Hotel who received every year for Christmas a card from one of the loyal guest. Only a nice Thank you card without any money inside. The day when the envelopes arrived the first two of the old waiters carefully opened his envelop, took 100 Euros out of his wallet and put it in the envelop which he carefully closed again. When the other waiter came and saw the envelop they both opened them at the same time. The second waiter read the guests note while the other one slowly took out the 100 Euro note, made sure the other one saw it and sighted “Only 100 Euros - same every year”

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