What is the origin of the word tip in the context of giving thanks for good service? The short answer is that no-one really knows.
There are two romantic urban myths; the first that a gentleman in the 17th century would ‘tip’ his hat to say thank you and one day this coincided with the handing over of monies.
The second, and considerably more popular romantic conjecture, is that early tea and coffee houses held a box in the corner with the words inscribed “To Insure Prompt Service.” Over time this was abridged to TIPS.
Etymologists tell us that, prior to the start of the 20th Century, there’s no single example of an acronym providing the derivation of a word. One suggested fact often cited is that literature first described a tip in 1706, “Then I, Sir, tips me the verger with half a crown” in George Farquhar play, the Beaux Strategem.
Three hundred years later there’s a lot of confusion, for different reasons, about tips in restaurants. At the turn of the 1990’s the US IRS noticed missing tax dollars from the tipping of croupiers in Casinos. This prompted closer examination of restaurants where the IRS later found an estimated $9bn tax revenue shortfall.
Where the spotlight falls in the US sometime later the spotlight falls in the UK. The UK however is more complicated, not only because it is laden with different old customs and practices but also the legal structure is very different. There’s the minimum wage, PAYE, National Insurance and VAT. Untangling where and when tips qualify as income for each or any is a matter for sophisticated consultants and accountants.
Some clarity has come into view recently with acknowledgement that tips cannot make up the difference in a basic wage that is set below the minimum wage. The minimum wage is the minimum wage and tips go on top.
The most commonly used system for pooling and dividing up tips in the UK is called a tronc – literally meaning trunk, or the French example tronc des pauvres meaning poor box. Here a points system is used to reward members of the front of house and kitchen staff.
The administrator, or troncmaster (sounds grand and slightly Masonic), has the unenviable job of ensuring that all taxes are appropriately avoided and not evaded.
More complexity arises from the UK practice of a 12.5% discretionary charge taken on credit card slips.
The restaurateur has processed this payment and experienced a 2% administration charge from the credit card company. Owners too point to damages and breakages and whether they should be covered as expenses taken from the pool of tips?
In any event – Everyone – The restaurateurs, the waiting staff, the customers and the government would all appreciate clarity and transparency; although achieving this is understandably more difficult than first thought.