By Bill Heaney in Dublin
When you are out and about in a city such as Dublin, it costs a lot of money for entertainment.
Inevitably most of it goes on food and drinks, theatre tickets and taxis – and tips.
It’s remarkable then that the Irish Times has chosen today, Saturday, while we are enjoying ourselves here, to do a special feature on tips, the actuality and the ethics.
Here for your interest and edification is Deidre Falvey’s take on tips:
IN THE MURKY WORLD of tips and service charges, there are myriad problems, for staff, managers and diners.
1. Lack of transparency
A waiter who has worked at a number of Dublin restaurants says: “I don’t trust anyone when it comes to tips at all.” While many restaurants are scrupulous, in others it is unclear to staff and customers how tips are handled. Waiters describe witnessing large amounts in tips, but staff getting what seems a paltry amount.
2. Tips or service charges used to pay contracted wages
On the practice of using tips or service charges to pay basic wage costs, employment lawyer Richard Grogan says: “There’s an assumption [by diners] that tips and service charges go to staff on top of wages.” Using tips or service charges to pay basic contracted wages is a “misclassification” he says; if it isn’t going to staff, “they should not be able to call it a tip or service charge”.
3. Tips and service charges “absorbed” into general cashflow
When service charges go into the general pool or to the owner, they become part of the business’s general income, and an additional invisible cost onto the displayed menu price for consumers. Grogan’s analogy is: “If you went to buy a T-shirt for €20, but at the till were charged €22.50 to cover a 12.5 per cent service charge, there would be uproar. This is pure unadulterated rip-off of customers.”
4. Who is included in a share-out of tips?
In some restaurants, kitchen staff are on higher pay rates and may get a lower share of pooled tips or tip-outs from waiters. In others, kitchen staff are on similar rates to waiters, but see little of the largesse from an enjoyable dining experience, to which their work contributed. Then there’s the issue of owners and managers getting a share of tips, which boosts already higher earnings.
5. Should tips be pooled or not?
There is disagreement among waiters about this. Not everyone works equally: “Why are they getting the same money as me?” asks one waiter who doesn’t see why the tips she generates should be pooled and shared equally with others who may not pull their weight or have as much experience. “It’s a major issue. I’m carrying some staff members.” Elaborate tronc programmes with points for experience and seniority may be more transparent, but pooling tips is less complex for smaller operations – and has the advantage of sharing the bad luck of having a poor tipper.
6. Cash and card tips
In an increasingly cashless world, tipping in cash in the hope that a waiter – not their boss – gets a tip, can be difficult. In some restaurants, card tips are taken from the till in cash form to be distributed among staff; in others, they are taken by the restaurant and redistributed later. This system is not always clear and, in some cases, appears not to happen at all.
Tips are part of income, and liable to taxation. It’s up to workers to declare them. The more transparent tips become, the more transparent the tax liability becomes. This is a grey area and some prefer to keep it deliberately vague. In the recent Seanad debate, Senator and former minister James Reilly expressed the wish that tips would “remain free from the Revenue Commissioners’ attention”. Lawyer Richard Grogan is appalled at this suggestion that Revenue should turn a blind eye to income, and that a black market area of the economy would be acceptable.
ARE THERE ANY SOLUTIONS? Discussing the issue of tips in the Dáil in March, Minister for Foreign Affairs & Trade, Simon Coveney, said: “Let me just be very clear: Any employer that calculates salary and includes tips in that figure is acting illegally. You can’t do it. Tips are separate to salary. And if there are issues, the Government needs to act there: we will look at that closely.”
But Coveney was incorrect – it is not illegal at the moment for employers to keep tips, which is why there is a concerted effort to do something to protect the gratuities of lower-paid precarious workers in the hospitality sector
Great restaurants and watering holes abound in Dublin’s Fair City.
What can be done?
The Restaurants Association of Ireland favours a voluntary code; president Liam Edwards said in March that tips were a major issue facing restaurants, which its chief executive, Adrian Cummins, and Minster for Employment Affairs Regina Doherty discussed.
As there is currently no law requiring tips to be passed on to employees, is it really any surprise that so many of the larger restaurant chains are engaging in poor practice in this area?
“We feel it is best practice that members display their tipping policy. I think the customer is looking for transparency and confidence that when they tip for good service that the money goes directly to staff.”
A voluntary code may not be sufficient. The “best practice” of displaying tips policy is as rare as hen’s teeth. And phrases such as “distributed among all the staff” are non-specific and could be argued to be virtually meaningless.
Senator Paul Gavan’s National Minimum Wage (Protection of Employee Tips) Bill 2017, currently going through the Seanad, would have teeth beyond a voluntary code, stipulating that employers cannot withhold gratuities, and including reference to service charges that “a reasonable person” would infer “the customer intended or assumed that the payment would be redistributed to an employee or employees”.
Gavan, a Sinn Féin senator, says: “As there is currently no law requiring tips to be passed on to employees, is it really any surprise that so many of the larger restaurant chains are engaging in poor practice in this area? A Sectoral Employment Order could easily address this issue.” Such orders fix statutory minimum pay, pension, unsocial hours payment and sick pay entitlements in a sector. Gavan says they have worked well in the security and cleaning sectors.
Transparency is essential if there is to be any sense of fairness – and avoid disgruntled staff. Who handles and manages distribution of tips – staff or management – is a factor in transparency. It is also arguable that if service charges or tips are retained or part-retained by the owner, that money should instead be added to the displayed menu prices.
SO HOW SHOULD YOU, the restaurant customer, approach the practice of tipping?
For a member of the public eating out, there is uncertainty when presented with a bill. If you leave a tip or pay a service charge, it may go to the individual server, or be pooled among the lower paid staff, or management/owners may share in the tips pool, or it may be handled entirely by management, and contribute to the above-the-line profit.
The advice from service staff is to look properly at your bill. If there is a service charge, always ask where it goes. If you are considering a tip on your card, ask the waiter where it goes. And act accordingly. If a service charge is not going to staff, you can politely say you would rather not pay it and leave a tip instead.
Basing tips on percentages is irrational. We pay a larger tip for a waiter to bring a fillet steak to the table than to bring a hamburger, for the same service
And basing tips on percentages, rather than the amount and quality of service, is irrational. We pay a larger tip for a waiter to bring a fillet steak to the table than a hamburger, for the same service. As Grogan points out, pouring a €70 bottle of wine is the same service as a €20 bottle in a restaurant.
Some people hold a more radical view: that there is a problem with the whole concept of tipping. Why, they ask, should someone’s income for a job be partially paid on a grace-and-favour basis, according to the whim of the dining public?
Scholars point out that tipping is a legacy of slavery and racial oppression in the US; part of the reason it is less ingrained in Europe. Perhaps the simplest solution would be for restaurants to pay staff adequately for the job they do – and do away with tips altogether.
Some names have been changed