TIPS HAVE SURELY existed since the exchange of services began - but modern tipping culture has morphed into another beast. We can blame the Americans for the expectation of leaving no less than 20% on the plate, regardless of superior service. But it was hoteliers and restaurateurs who introduced the ubiquitous 'service charge', a device that emerged to ensure the kitchen staff were included as well.
Previously, cash tips were either kept by the server or more usually handed over to the head waiter who held it in a 'tronc' and distributed. The consequence of this is well known to anyone who has served at the bottom of the hierarchy...
Of course, it wasn't long before some unscrupulous operators decided that the service charge was a useful way to add back to the minimum wage and reduce payroll. Service charge occasionally confuses consumers, some of whom feel that in addition to paying the charge on the bill it's also obligatory to leave a cash tip on the plate.
The introduction of the service charge also held some unpleasant surprises for those that applied them. It took a little while, but before long the tax inspector came along and decided that VAT was applicable on items served, including the service charge. Back payments to Her Majesty's Revenue sent some businesses to the wall. It was agreed that, if the customer was left with a choice as to whether to pay the charge or not, it would be 'discretionary' and tax free. Look carefully at your next bill to spot whether that important word is added before 'service charge'. If not, then 20% VAT will have been added for service to the overall tax on the bill.
image [https://cdn.magzter.com/1450191940/1737482156/articles/jfHwxlhFu1737718423048/CSzImdPaq1737718626660.jpg]
Soon enough it became clear that the system was a mess, with those doing the actual work missing out on income intended for them. Even professional businesses deducted monies for administration and credit card commission from the overall take before it was distributed.
Time for change
Business travellers will be pleased that the British government approved new tipping legislation in October 2024. The Employment (Allocation of Tips) Act 2023 was originally due to go live last July, but got pushed back to allow more time to prepare.
Does this me...
Previously, cash tips were either kept by the server or more usually handed over to the head waiter who held it in a 'tronc' and distributed. The consequence of this is well known to anyone who has served at the bottom of the hierarchy...
Of course, it wasn't long before some unscrupulous operators decided that the service charge was a useful way to add back to the minimum wage and reduce payroll. Service charge occasionally confuses consumers, some of whom feel that in addition to paying the charge on the bill it's also obligatory to leave a cash tip on the plate.
The introduction of the service charge also held some unpleasant surprises for those that applied them. It took a little while, but before long the tax inspector came along and decided that VAT was applicable on items served, including the service charge. Back payments to Her Majesty's Revenue sent some businesses to the wall. It was agreed that, if the customer was left with a choice as to whether to pay the charge or not, it would be 'discretionary' and tax free. Look carefully at your next bill to spot whether that important word is added before 'service charge'. If not, then 20% VAT will have been added for service to the overall tax on the bill.
image [https://cdn.magzter.com/1450191940/1737482156/articles/jfHwxlhFu1737718423048/CSzImdPaq1737718626660.jpg]
Soon enough it became clear that the system was a mess, with those doing the actual work missing out on income intended for them. Even professional businesses deducted monies for administration and credit card commission from the overall take before it was distributed.
Time for change
Business travellers will be pleased that the British government approved new tipping legislation in October 2024. The Employment (Allocation of Tips) Act 2023 was originally due to go live last July, but got pushed back to allow more time to prepare.
Does this me...
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Business Traveller Uk (Digital) - 1 Issue, February 2025