What does a tip mean? Well, the definition from the Macquarie Dictionary for a tip or gratuity is a small present of money given to someone, as a waiter, porter, etc., for performing a service; a gratuity. (It is widely claimed that the word is an acronym for ‘To Insure Promptness’ and originates from 16th Century English coffee houses but as acronyms were not thought to have been used until the 1920s, this claim is disputed.)

Depending on the location in the world a tip to an employee constitutes a considerable percentage of their wage. In some states of the USA a restaurant employee earns merely 30 per cent of their wage from the employer and essentially requires earning the remainder in tips. In this environment, the consumer is compelled to leave a mandatory tip of around 10-15 per cent, but overall the standard of service is outstanding.

In Australia tipping is often isolated to standalone restaurants and those within hotels. Depending on the level of service offered, receiving a tip should not be expected as it is overseas. The Australian public demands a high level of service but is not prepared to pay for it.

What service requires a tip? It’s basically all about ensuring the guest is looked after and goes away satisfied. Service staff that go the extra mile will always receive greater tips than staff that provide ordinary levels of service. A large proportion of tips left are from overseas visitors and the remainder are from individuals who have received service beyond normal circumstances.

Many restaurants in Australia manage tips by dividing the daily or weekly overall tips among their waiting staff. Although this seems reasonable in principle, should the total be divided by every employee of the restaurant? Besides, it takes a team effort to provide a quality customer experience. This concept seems fairer, as the service staff require kitchen staff to produce the meals and kitchen staff require these dishes to be served.

I recently heard of a well-known Sydney restaurant who devised a tip system that was considered fair to all employees and was incorporated into the restaurant’s workplace agreement. Prior to the system being implemented waiting staff were taking as much as their wage in tips each month. Tips were divided on a weekly basis and five per cent of all tips went back to the management which contributed to guest walkouts and breakage issues. The remainder was split equally with 50 per cent to the service staff and 50 per cent to the kitchen. Each managed their 50 per cent in different methods. A tier system was introduced on the service side of the operation for various reasons. The management considered that well educated waiters contributed greatly to high tips as they were the only contact with guests. Therefore waiters had to study the menu and wine list, then sat a compulsory exam. There were two tiers, the top level demanded waiters to receive a 90 per cent result to obtain an equal share. The lower level was a 60 per cent result in return for 60 per cent of the equal share. This system greatly improved waiter knowledge, whilst improving service standards within the restaurant.

Kitchen tips were equally divided to all chefs and kitchen hands as all staff were full-time. This system gave the kitchen team a reward each month for ensuring the high standards of meals were continued and it particularly assisted chef apprentices, which were on low award wages. The average kitchen member received approximately $100 – 200 a week in tips. It dosent sound much, but to apprentice chef or commis chef the kitchen tips could represent a bonus of about 25% to their weekly wage.

For restaurant that may look at implementing such a system as described, this strategy does not directly generate any more extra revenue for the restaurant. However the development of employee awareness and attitude of service will improve, as too will the tips and gratuity. This eventually will have an overall effect on the establishment’s service standards and a flow-on effect to the restaurant’s reputation for service.

As a restaurant employee that receives tips from time to time, be sure to note this as income. Often the Australia Tax Office runs audits on restaurant employees in regards to tips. This could indeed become costly if you are caught.

So next time you receive quality service and food, why not leave a token gesture to say thank you. Better still, why not say the tip has been left for the chef!