Tips for handling tips in hospitality
Tips are a way for guests to show appreciation for your good service. They not only serve as a reward but also provide you with some extra cash. In the hospitality industry, tips form a significant part of many employees' income. However, the way tips are handled can vary greatly from one establishment to another and is often a topic of discussion.
What are tips?
A tip is an additional payment given by customers as a token of gratitude for the excellent service they have received. It's a way for them to express their satisfaction with the work of hospitality staff. Tips can vary in amount and are usually given directly to the staff. Sometimes, however, tips are distributed among all staff members. In certain cultures, tipping is customary and is considered a normal part of the Dutch service industry.
How are tips distributed among staff?
The distribution of tips can vary depending on the hospitality establishment. Some restaurants choose to evenly distribute tips among all staff members, while others allow the person who provided the service to keep the tip. It's important to understand how your workplace handles tip distribution, as it can affect your income and job motivation. Specific rules or agreements regarding tips may apply within the company, so make sure you are aware of them. Generally, employers do not share in the tips and typically do not have a say in their distribution. Only if the employer actively participates in the work may they potentially receive a portion of the tips.
Examples of tip distribution methods
Within the hospitality industry, there are different methods of distributing tips. Some companies opt for proportional distribution, where all tips are shared equally among staff regardless of their position. There are also companies that distribute tips based on hours worked, but with exceptions for specific tasks or jobs that deserve extra appreciation.
Some examples of how tips are distributed:
Even distribution: All received tips are equally divided among all employees, regardless of their role or performance. This ensures fair distribution, with everyone receiving an equal share.
Rank-based distribution: Tips are distributed based on the responsibility and rank of the hospitality worker. Employees in supervisory positions with greater responsibilities may receive a larger share of the tip pool.
Time-based distribution: Some companies distribute tips based on the hours worked. Employees who work more hours receive a larger portion of the tips.
Exceptional pooling: In this scenario, the majority of tips are evenly distributed among staff, but exceptions can be made for specific tasks or roles deserving of extra appreciation.
By section: In some hospitality establishments, tips are distributed based on the section or area where a staff member has worked. Each staff member is assigned a designated section or area in the restaurant or bar. At the end of their shift, they keep the tips they have received from the tables in their assigned section.
Make clear agreements about tips
For hospitality workers, it's important to establish clear agreements when it comes to tip distribution: Keep a daily log of the tips you receive. Discuss with your employer how tips are distributed, especially if there's a tip pool. Be transparent with customers about the tipping policy. Discuss whether any cash register shortages should be supplemented with tips. With an increasing number of tips being received via card payments, distributing tips can become more challenging. Therefore, it's wise to appoint someone to manage the tip jar and coordinate the distribution.
Are tips considered part of my income?
Tips are not considered part of your income and are therefore not subject to wage tax. They cannot be considered a mandatory part of the minimum wage. The hospitality collective labor agreement (cao) does not address tips, nor are there any legal regulations governing them. Employers should not expect tips to supplement the minimum wage to the legally required level. However, they are considered taxable income for income tax purposes. When filing your tax return, you must declare the tips you've received.
Can your employer withhold your tips?
The hospitality collective labor agreement does not include rules about tips, nor are there laws regulating this. However, the Supreme Court has ruled that tips you receive belong to you. Therefore, your employer cannot withhold your tips. They rightfully belong to you.