Don’t be the guy who doesn’t tip, especially after this year

If you left a tip this Christmas, can you really be sure whose pocket your money ended up in?

Since the beginning of the pandemic, more and more of us are going cashless and that has big implications for the earnings of waiting staff.

Covid-19 has accelerated a general trend away from physical payments to cards and contactless.

As of June 2021, just 17% of all transactions involved cash, according to the Financial Conduct Authority. 

The organisation found that at least three quarters of all age groups are now routinely using contactless, a death knell for coins and notes.

For many people, the only time we’re fully conscious of this change in our habits is when rummaging around in the bottom of pockets and bags for something to leave as a tip.

Increasingly, there’s nothing in there – no stray fiver, no random assortment of coins.

More and more of us use a card or pay a service fee instead but this has big unseen implications for people who rely on tips to make a living.

Waiting staff no longer take a handful of money home at the end of a long night – instead, they see their tips calculated by the company and paid out accordingly.

Why does this matter? The trade union Unite is campaigning for the rules around electronic payments to be made fairer to ensure companies aren’t able to turn it to their advantage at the expense of the lowest paid members of staff.

Union official Dave Turnbull told Metro.co.uk: ‘Everything now just goes through the payroll.

‘As a consequence, employers are just seeing this as an income stream.’

So how are big restaurant chains turning cashless tipping to their advantage?

The first way is via the proliferation of service charges.

They’re nothing new but are increasingly common – and they aren’t tips. As much as half of the money may be going towards paying management salaries.

And then there’s the grey area of tipping on a card, which is covered by a niche tax framework called the Tronc system.

It’s underpinned by a complex set of regulations but what you need to know is that tips collected via this method are pooled and then paid out by the company.

Under the rules, firms don’t have to pay national insurance on sums given to staff via a Tronc system and the rates at which different staff members are remunerated are set by a committee made of staff from across the business.

There are technical differences between both but the end result is the same: a smaller chunk of your money is often going to waiting staff, the employees who are most likely to be on subsistence wages and relying on the generosity of customers to get by.

Unite argue the system is being abused to help companies avoid paying national insurance, get out of other employment obligations and cover the salaries of more expensive, in-demand kitchen staff – all at the expense of those who rely on tips the most.

Mr Turnbull said: ‘Chains are adopting this model where everybody up to the general manager is kind of bounced into agreeing that their hourly rate will be minimum wage and that the rest of their salary will be guaranteed from service charge. 

‘The benefit to the employer is that they are then not paying national insurance on 50% of their payroll, your pension or redundancy or anything like that. 

‘So it’s a really bad deal in the long term for those salaried workers, but they’re kind of bounced into accepting that’s the way things are. 

‘And then obviously customers don’t leave the tip because they believe that paying the service charge but not realising that actually, they’re subsidising the payroll of the company.’

The union says the spread of the Tronc tipping system is being driven by consultants working in the hospital industry who are ‘selling this as a way to cover off a large proportion of salaries without the liability of national insurance’.

Pizza Express has previously been criticised for how it handles staff tips. After restaurants were allowed to reopen after the first lockdown, waiting staff were surprised to find out tips were now being split 50-50 between front and back of house, rather than the previous 70-30.

It meant the chain was able to enumerate chefs better but waiting staff say they took a hit.

A member of staff at a London branch sympathised with the difficult position restaurant bosses have found themselves in after Covid-19 but said the answer to income loss and staff shortages in kitchens can’t be effectively cutting the salary of waiters.

They told Metro.co.uk: ‘It must have been very hard for big companies with huge amounts of uncertainty and overheads, I understand all of that.

‘But my perspective is that I came back to work in May and it was awful. Waiters were earning 40% less, easily.’

For their part, Pizza Express said decisions on tipping are made by the committee and it ‘is entirely employee-led’. They said the company ‘takes absolutely no charges’ and that cash tips continue to ‘go directly to the server who served you’, while ‘100% of all tips go to our restaurant teams’.

There has been big progress on wage fairness in restaurants in recents years and the government is considering further legislation – tips can no longer be used to meet minimum wage, for example.

But Unite says there is still a long way to go and is calling on the government to clean up the Tronc system so customers know where their tips are going.

Mr Turnbull said: ‘Things have moved on but the whole attitude of employers hasn’t changed.

‘It’s still in their mind that it’s their money, that they’re going to decide how it is shared, not that it’s money that belongs to the staff.’

So what’s the best course of action if you want to make sure the tip you’re leaving is going to the waiter who’s been looking after you all night?

Mr Turnbull said: ‘If you can bring some cash in your pocket….that really would probably be the best way. 

‘I know a lot of people don’t carry cash around and a lot of places don’t accept cash payments but it is worth thinking about.’

The member of staff at Pizza Express agreed cash was the best way to tip but urged people to still pay electronically where it is the only option.

She said: ‘We’re getting situations now where people don’t leave a tip on cards saying “well, you don’t get it”. Occasionally people go out and find an ATM which is very, very sweet. 

‘But some people feel so strongly about the way money is shared out now that they won’t won’t pay a tip because they don’t want to fund the business’.

Moral of the story? If you’re eating out, maybe head for one of those ‘hole in the wall’ things you used to use.

Get in touch with our news team by emailing us at webnews@metro.co.uk.

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