A Walk Through The Confusing World Of Staff Tips

DO CHEFS GET TIPS? This is a question that can be overlooked by many. Those keen to start their careerOpens in a new tab. want to dive straight into the cooking, and the financial aspects of the job are secondary.

Whilst this is a commendable attitude, after all we should place greater value on enjoying a career rather than the financial rewardsOpens in a new tab. (what’s the point in working a job we hate just to earn more money?)

However, the issue of staff tips is an important point that should be given consideration when taking a new job. Even if not for the financial aspect, they also play a part in the team atmosphere that is present among the staff.

For those readers who want a quick answer:

Whether or not a chef receives tips is dependent upon the individual policy of the restaurant. Some establishments split their tips evenly between all staff, whilst others use their the legal right to retain all the gratuity added to a customers bill.

The difference between a chef being given a fair share of the tips, compared with a restaurant where they get none, has a huge impact on their overall salary earned.

Perhaps a reason it is often overlooked is the fact that it is a very murky world to walk through. There are very few standardised rules across the industry, each restaurant operates its own policy on staff tips.

There are also some surprising factors regarding the gratuity that is addedOpens in a new tab. to a customers bill, just how much of that money actually makes its way to the chefs in the kitchen?

Discovering a business can keep all the gratuity money added to a bill may come as a surprise too many people and is something we shall look at in detail below!

First we must quickly differentiate between cash tips and service charges added to a bill.

What’s The Difference Between Cash Tips and Service Charges?

When we go out to eat we may find at the bottom of the bill a statement that says something along the lines of ‘optional gratuity of 10% added to the bill.’

This is legally different from handing someone a cash tip for the work they have done.

A service charge, or optional gratuity is handled by the business. They will distribute this gratuity among the staff as they see fit. Cash tips given to staff are owned by the individual server and they can choose to do as they like with these.

This is a very important distinction when it comes to who the tips ultimately end up with and who is responsible for paying tax on the money earned.

Are Staff Tips Taxable?

As the amount of money staff can earn through tips is quite substantial it will come as no surprise to discover that the governmentOpens in a new tab. wants their slice of the financial pie!

In the UK, all tips received by staff are taxable as income. Who is responsible for declaring the income, and making the necessary deductions, is dependent upon the way in which the tip was collected.

  • If the tip is given in the form of a gratuity added to the bill, the business may choose to divided this money out among its staff. In this case they must make the necessary PAYE deductionsOpens in a new tab. as part of the process.
  • The same is true if the tip is given via a card payment. For example, perhaps a customer decides to add a tip as part of their card payment process when paying the bill at the end of a meal. This tip goes via the business so the same rules regarding PAYE apply.
  • If a tip is handed in cash to a serverOpens in a new tab., it is the responsibility of the individual to declare this income and pay the necessary tax on it. The business does not get involved in this instance.

My understanding is that this additional income is not liable for national insurance contributions. However:

IMPORTANT DISCLAIMER: I am in no way a financial advisor and individuals should check that they are complying with the relevant tax laws in their country. Tax evasion is a serious crime that carries heavy penalties for those found guilty.

More info can be found on the governments website regarding tips and gratuity at work, linked hereOpens in a new tab..

So that’s the tax issue covered, but perhaps the greater issue for chefs is how much tip money do they actually get to see?

How Much Do Chefs Earn In Tips?

This is now where we get to the muddy waters when it comes to tips. Each individual business will have its own idea on what is considered fair renumeration for chefs.

Whether or not chefs earn tips depends on the individual business. Some businesses will ask that all staff tips be shared evenly with the kitchen staff, others will give a percentage cut to the kitchen (perhaps 10%), whilst some will give no tips to the chefs whatsoever.

Cash tips given to staff are obviously very difficult to police. The chefs are out the back working away in the kitchen so have no direct contact with the customers.

There is no way a chef can accurately know how much money the front of house staff are being given in the way of tips. This can lead to a divide between the chefsOpens in a new tab. and front of house staff if they feel they are not being given their fair share.

Are Gratuities Added To A Bill Paid To Chefs?

On my research journey for this article this is the one piece of information that I came across which shocked me!

Businesses are not legally obliged to give the service charge paid by customers to their staff. This gratuity is money owned by the businesses to retain, or to divide among the servers and chefs, as they see fit.

To break this down, this means that when a customer pays the additional service charge on a bill there is no guarantee that any of it goes to the staff on the ground, ie the waitering staff and the chefs.

The business owner is legally allowed to keep 100% of this money if they see fit!

This article demonstrates how Michelin starred chef Micheal Roux Jr admitted that his restaurant Le Gavroche keeps 100% of the service charge it adds to the bill (linked here)Opens in a new tab.

In reality, what we often see is that the business will take a percentage of this money for administrative purposes and divide the rest among the staff.

This deduction can vary between businesses and it is at the owners discretion (or the person appointed by the owner to handle the divvying out of staff tipsOpens in a new tab.)

There are many examples of rifts forming between employees and owners over what they consider an unfair distribution of the tips.

Many customers are often shocked to discover that this gratuity does not have to go to staff.

Again the problem of monitoring how much is actually given as a tip by the customers on a large scale is difficult.

It should be pointed out here that some businesses choose to share out all of the gratuity money added to the bill. It really is dependent upon the owners ideas around what constitutes fairness for its employees.

The actual percentage of tips each group of workers in a restaurant get can be the source of many heated discussions and negative feelingsOpens in a new tab.. We’ll now look at the various ways tips are distributed and the pros and cons to each.

Do Staff Tips Have To Be Shared Among All The Staff?

There are different rules regarding how staff tips are shared out among the staff, dependent upon the individual business’ policy. Even when it comes to tips given as cash to a server; there is often a policy in the restaurant that asks for the tips to be shared in a certain way.

It is of course up to each individual collecting the tips to follow the policy of that business, but most employeesOpens in a new tab. will follow the guidelines as long as everyone else does!

Let’s look at the various options and their pros and cons to both sides.

Tips Divided Evenly Among All The Staff

  • Chefs earn a lot of additional income in this instances. It also helps to create a great team atmosphereOpens in a new tab. between the front of house and kitchen staff.
  • The food being served is all part of the service. If a customer has a bad meal they are unlikely to leave a good tip. Therefor the chefs should be fairly rewarded for their part in the service.
  • Some front of house staff see this as unfair. They believe they are the customer facing position and the tip is directly related to how well they perform their job.
  • Servers also argue that in many cases they earn considerably less Opens in a new tab.than chefs and that the tips should be solely theirs to increase their wage.

Chefs Get A Percentage Of The Tips

  • Servers argue that giving a portion of their tips is a fair representation of the contribution the food made to the overall experience. By allowing servers to keep a large percentage, owners are recognising the service is the main reason the tip was given.
  • Chefs would argue that a percentage is in no way a fair representation. Again the argument is, that without good food served on timeOpens in a new tab., no tip would be given at all.

Businesses That Keep A Percentage

  • The owners will argue that they need to retain a percentage as an admin fee for sorting out the necessary PAYEOpens in a new tab. deductions etc.
  • Owners will also feel they are entitled to a share of the tips as the atmosphere they have created is all part of the customer experience.
  • Some chefs and servers will argue that the gratuity is paid by customers as they believe the whole amount is going to be divided among the staff; they wouldn’t pay it if they knew the owners took a cut.

Businesses That Keep All The Gratuity Paid

  • Owners will argue that by taking these tips they can pay their staff a higher hourly wage. They can also keep food prices down so they can attract more customersOpens in a new tab. and keep the business thriving.
  • Chefs and servers will again argue that this tip is given in good faith by the customer as they believe it will be given to the staff for their hard workOpens in a new tab.. They simply wouldn’t pay it if they knew it went to the owners.

To Sum Up

We could debate the points of the various splits all day long; in many restaurants the staff do spend a large amount of their time discussing the tips!

I was very disappointed to discover that there is no law which states the business has to pass on the gratuity to its staff.

Going forward, whenever I eat outOpens in a new tab. I shall make a point to ask the server how much of the tips the staff on the ground receive. Based on their response I may choose to pay the server a cash tip instead.

I have personally worked in places where all these distribution methods have been in place. In my opinion the best team atmosphere is when a place divides all tips evenly among all its staff.

This does a lot to help prevent the kitchen staff / front of house staff divide, that can cause problems in many restaurants. 

Of course as a chef I would have the opinion that all tips should be divided, if I was a server I may have a different opinion!

As we can see the issue of do chefs get tips is by no means straightforward. My advice is ask the questions before accepting a jobOpens in a new tab., so there are no nasty surprises down the line.

Dave Nicholas

Having spent around 10 years working as a qualified chef in high end restaurants, my mission is to use this experience to help others as they begin their career in catering!

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