“Threatens jobs” has been the stock wolf-cry every time a basic employment right was introduced, or a dodgy practice stopped. I remember when the minimum wage itself was going to mean the end of civilisation.

[1] It didn’t end civilisation. It just meant that people who can more easily get away with employing illegals (farms etc) do so knowing they are savings vast amounts not paying minimum wage, while 6m Britons claim some form of out of work benefit.

Why employ 1 Brit when you can fairly safely employ 3 or 4 illegal workers, and let the state worry about the Brit?

Perhaps we should just get more south European about this.

Americans tip at 20% because they know how poorly waiting staff are paid and understand that decent service requires a handout. South Europeans don’t tip because service is implied in the purchase cost; if you are happy to pay a Euro for a cup of coffee, use the local cafe; brew your own if your budget is limited.

As much as I despise enforcement laws, guaranteed minimum wage laws should apply in absolute to all in the UK. Part of that contract means that the worker is fairly paid and the customer is well served. When I pay for my petrol, I’ve never considered giving a tip so that attendants achieve their minimum wage, so what is different about coffee, meals or haircuts.

Service compris or similar? It’s the same customer and staff rip off.

Mark M,

So we enforce the existing laws properly.

Charlieman,

“Americans tip at 20%”

Just curious, which Americans are these? I’ve never seen our transatlantic cousins leaving that much on the table, whether at home or abroad…?

My (to-be-ex) in-laws certainly didn’t

)

4. I much agree…and the laws being talked about don’t seem to stop restaurants from doing just that either. No-one is saying tips should definitely continue, this is most certainly about only two things, a minimum wage requirement, and a fair and transparent experience for the consumer.

It’s why I don’t really see any meat in the claims being made by the BHA here.

On the earlier thread a link was made to a Spectator piece about this.

http://www.spectator.co.uk/coffeehouse/837526/waitron-units-and-tips.thtml

For some reason that site doesn’t make clear I am/was that waitron unit.

The law is and has been for many years entirely clear. Cash tips belong to those who are given them. Service charges belong to the restaurant that charges them.

That’s it.

As far as the minimum wage is concerned of course, your total compensation as a waiter is your wage from the employer plus whatever tips you earn. That’s why you go do the job (any job), for the total compensation package, not just for the wages (total compensation packages include all sorts of things like pensions, sick pay, time off, holidays, flexible working hours and so on).

The law as it has been is that as long as that tips plus wages is higher than the minimum wage that’s fine. The US, a similar (ish) tipping culture to the UK has the same thing in most states.

One of the proofs of the contention that waiters work for the tips is that the competition to get the good jobs is that the competition is to get a job at a place where you can earn high tips (and I write as someone who made their living this way for near a decade).

Now, there is something that seems not to be being considered here in this idea that prices should go up so that waiters get both NMW and tips (or that tips should be abolished, prices going up to provide a better income through the wage).

The tax wedge.

Very important this is. Get rid of tips (and insisting upon full NMW plus tips is a halfway house to this) means higher prices to the customer and a static income for the waiter: or, same prices for the cutomer and lower incomes for the waiters.

For: Tips pay income tax. (OK, honoured sometimes in the breach but most restaurants now operate a tronc system. HMRC just loves investigating those that don’t). But tips, as above, are the property of those who are given them. They are a straight payment from customer to waiter. Thus there is no National Insurance liability. Neither employees nor employers, which together are about 25% these days.

Similarly, no waiter is earning (well, actually, a very few might be) over the VAT limit in a year. So no VAT is payable upon tips either. 15% now, 17.5% in normal times.

So, as a good law abiding waiter you get your £30-£60 a shift (that lower number is what I was earning in the 80s in the West End) and pay your 20% income tax and pocket the 80%.

If you instead are paid through higher prices and then your pay packet then the other two taxes then come into play. VAT and NI amount to 42.5%.

Just to keep the math easy, imagine that there’s a £100 pot of money. If that is paid in tips then the waiter gets £80 and the taxman £20 for £100 that comes out of the customers’ pockets.

If it’s paid in higher prices and pay packets then of that £100 from the customers’ pockets the tax man gets £62.50 and the waiter £37.50.

So by abolishing tips you either increase the amount the customers must pay to keep the waiter’s income static or if the customers’ costs stay static you decrease the waiter’s income.

This just doesn’t sound like a good deal for either waiter or customer (note that none of this has any primary effect on the restaurant’s numbers at all). Paying more to provide the same income or paying the same to provide a smaller income.

It most certainly doesn’t sound like a way of improving waiters’ incomes.

As I say above, these examples are of the two truly different systems. Insisting on the NMW is a halfway house between the two and has exactly the same problems only writ small, not large.

Having waited tables in university vacations for an unnamed stately home, I have to say that this law will be much-welcomed! Being under 21, we were paid a delightful £4.65 an hour, worked 8-hour shifts without breaks, and were not allowed to keep our tips. However, I fail to be convinced that a change in the law will make any difference – after all, 8 hours of work without a break has been against EU law for several years now….

“Now, there is something that seems not to be being considered here in this idea that prices should go up so that waiters get both NMW and tips (or that tips should be abolished, prices going up to provide a better income through the wage).”

The trouble with this as an argument, to entertain tax purposes as a reason for maybe not having an ensured NMW, is that it allows restaurants that don’t provide a good enough overall service to garner tips (as this can include service time, food quality, etc…waiters get their “bonus” based on a lot of factors out of their control) or aren’t clear enough about where money is going to get away with taking a significant cut of what is, in the minds of the customer, intended for the individual that served them.

Yes, perhaps the cost of eating out would increase slightly (and we are talking slightly here), and perhaps the culture would change in terms how much tipping goes on…the question is this, is it a bad thing if it results in a fairer and more equal practice in the industry?

Andy Gilmour @5 Re: US tipping policy.

Here’s a guide aimed primarily at US readers about tipping in the UK:
http://gouk.about.com/od/ukcurrencymoneymatters/f/Tipping_UK.htm

I suggest that the Americans that you’ve encountered here have read such guides and have adjusted their habits. I have no explanation why you have seen so many tight wads in the USA.

Tim Worstall presents a reasonable argument, but I think he’s ignoring the bloodymindedness of customers.

* If I’m at a local restaurant, and the menu does not say service charge included, I’ll tip at ~10% if it is deserved.

* If the menu says service charge included, I never tip.

* If I’m at a chain owned restaurant where I know that tips are used to meet national minimum wage, I won’t tip. That’s crap for the waiting staff, but they may learn enough in that job to get another with someone who pays fairly.

My argument is that the current dishonesty by owners does not encourage tipping. Get rid of the tip expectation/service charge, provide honestly priced menus (no extras for corkage etc) and pay NMW to staff. And allow customers to reward staff for exceptional service. None of which is new, simply taking us back to the world before restaurant owners thought they had a winning rip-off scheme.

An aside: Personal dignity and an allergy to tossers have prevented me from dining at any of those sushi parlours where the food recirculates on a conveyor belt. I was wondering whether they impose a service charge for serving yourself.

Charlieman, the waiting staff at sushi bars (in my experience) still bring you drinks and specific items that you order that aren’t on the conveyor. The Yen Sushi in Bath is quiet, out of the way and friendly; in no way smug or tosserish