Tipping: do you know where your money really goes?

Do you know whether the money you leave your waiter is also split with the kitchen staff? The cleaner? The head office manager? 

Do you fret over whether to tip when getting a haircut or agonise over whether to slip your postie a fiver at Christmas? 

If you’ve ever felt unsure of tipping etiquette, look no further. We’ve quizzed hundreds of people to shine a light on how tipping works, from service charges automatically added to your restaurant bill to envelopes of cash left for refuse collectors – and everything in between. 

Our research reveals big differences in how often we tip different types of workers and where the money actually ends up. We also offer advice on how to tip well and make sure your money rewards the people you want it to. 

Are you tipping the right people?

Tipping culture can be baffling, as anyone who’s travelled abroad will know. It’s a complex social phenomenon that isn’t always logical – after all, it can arguably lead to reduced pay, reduced tax receipts and may not even improve levels of customer service.

We quizzed more than 2,000 UK adults to uncover the secrets of who we tip, how we tip them and how much we give. 

Restaurant staff and hairdressers are the workers we tip most regularly, with just over a quarter of us leaving a tip every time. 

Most people tipping in restaurants leave between 10% and 12.5% as a tip. For hairdressers, it varied: our research shows 35% of people tipped under 10% on their last visit and 35% of people last tipped their hairdresser between 10% and 12.5%.

For the rest of the professions in our survey, most people tipped under 10% – if they tipped at all.

Interestingly, despite the decline of cash for transactions in recent years, our research found cash still dominates tipping across all sectors.

• Find out more: your consumer rights in a restaurant

Why we tip

Generally, people consider tips a reward for good service. But, perhaps surprisingly, a quarter of us leave tips despite poor service. 

Four in 10 of those who did tip told us they added one because they felt it was expected, while a quarter of tippers said they’d be embarrassed not to, and another quarter did so as they thought the bad service wasn’t the staff’s fault. 

One in five said they tipped despite a bad experience because the service charge was automatically added to the bill. And a hopeful one in seven believed their tip would provide an incentive for improvement next time.

Sometimes, it doesn’t even occur to us to leave a tip – this was the most common reason for those who didn’t tip in a restaurant over the past year. But others said it was due to financial constraints and one in 10 said it was because they had no cash or coins. 

• Find out more: what are the rules on paying with cash?

Where do tips go?

Tipping policies have hit the headlines for many of the wrong reasons over the years – from Pizza Express waiting staff winning a campaign for a bigger slice of their tips to workers at an upmarket Scottish hotel winning a battle to secure £138,000 in withheld tips.

Thankfully a new law, the Employment (Allocation of Tips) Act, came into effect last October which now means employers must pass on all tips to workers without deductions. It’s expected to benefit more than two million workers in England, Scotland and Wales.

Before the new law came in last October, there was no guarantee workers would even see your tip. Companies could keep tips to cover breakages, credit card fees or even to boost managers’ wages. 

That’s changed now, but there are still some fairly major differences in how big brands handle tips – and indeed, three in 10 of us are not confident about which staff our restaurant tips go to.

Which restaurant staff get the tips?

We asked the UK’s biggest restaurant chains how they allocated and distributed tips. Most have a system where workers decide how tips are allocated. 

Often these are pooled and divided between staff according to hours worked. Sometimes, they're split according to role. For example, back-of-house staff, such as those in the kitchen, sometimes get less, and those working evenings or weekends may get more.

Once pooled, tips are usually paid through the payroll system.

Cash tips are often treated differently from service charges or tips on credit or debit cards. They tend to fall outside formal tipping policies and often go straight to the individual receiving them, which is worth remembering if you intend to reward a specific person.

Some restaurants will add a discretionary service charge for larger groups or branches in high-cost locations such as central London. We found this varied between 10% and 12.5% depending on the restaurant chain. Reassuringly, this fits with the amount most people would tip anyway. 

We did find that a quarter of those we asked said the service charge on their most recent restaurant bill was more than they would have tipped, though. But you don’t have to pay it. You can also ask to choose the amount yourself. 

Just make sure you don’t end up accidentally tipping twice. We found one in six people added a tip in addition to the service charge without realising it was already included. 

• Find out more: how to split the bill

The new law on tips

The new law means employers must allocate tips to workers without deductions, and this must be fair, transparent and consistent. They must also have a written policy covering how they allocate tips. 

It hasn’t solved all the issues, though. The Unite union says some employers are withholding the full amount due to employees by not using their ability to exempt some tips from National Insurance payments. It says the language used in the guidance is ambiguous and the definition of ‘fair’ is open to interpretation. 

Kate Nicholls, chief executive of UKHospitality, said: ‘While how we leave tips has evolved over the years, as card and contactless payments have become the norm, the spirit of tipping to thank hard-working staff remains strong. 

‘If you want to tip a particular person, a cash tip allows them to keep it. Leaving a tip on the bill or on the table benefits the whole team, from front-of-house to chefs and kitchen porters working hard in the kitchen.’

'I used to earn £150 in tips, now I get £40'

One part-time hotel waitress told us: 'When I started, customers could pay by cash or card, and I took home all my tips. This always felt lovely and reflected the hard work I put in each shift. 

'But recently, the hotel went card-only. Now, all tips are given through card payments, and a discretionary 12.5% is added to the bill. This means all the tips go into a pool to be divided among staff. 

'I used to be able to make more than £150 in tips over a month if I was working a shift a week. Now I will only make an additional £40, sometimes less, even if I work the busiest shifts.'

• Find out more: our guide to tipping abroad

How to tip well

From making sure you don’t tip twice to asking staff where tips go, here’s our advice:

• Take cash with you There’s not always the option to leave a tip on a card payment machine. Plus, you may prefer to tip in cash if you want to reward a specific member of staff. So plan ahead and take cash with you.
• Try other ways to say thank you If you’re feeling cash-strapped, you can still reward good service. Leave a good review online instead, perhaps naming specific staff. Or leave chocolates as a thank you, particularly for cleaners or refuse collectors. 
• Check the bill Many restaurants add a discretionary service charge to the bill. So if you don’t want to tip twice, check whether this is already included. 
• Talk to the staff Feel free to ask the staff how the tips are shared and who gets what in the system. That will help you decide how best to reward those you particularly want to thank for their service.
• Don’t be embarrassed Don’t feel obliged to leave a tip if the service you received wasn’t up to scratch. You can ask for any service charge to be removed if you’ve had a bad experience.