Differences Between Service and Tips

Service vs Tips

If we like the service of a particular person, especially in restaurants, we often hand them a few dollars as a token of our gratitude. But these days, there has been an issue regarding replacing the tip with a service charge or simply service.

The tip is known as a gratuity. As we mentioned earlier, it is a small amount of money handed to the employee. Of course, we can hand it to them voluntarily. In other words, we are not forced to give the employee a small amount of money. So what’s the differences between service and a tip? If the customer hands the tip to the employee, that tip will be considered the employee’s possession. If it’s a service charge, the money paid will be the property of the business owner.

We hand tips to employees because we want to thank them particularly and not anyone else. Some business owners try to appropriate all of those tips for themselves to increase the income of their business. The customers might be tricked when business owners say that a service charge is the same as a tip, which is not really the case. According to the divisionoflabor.com, there is a law that forbids any arrangement between the employer and the tipped employee whereby any part of the tip received becomes the property of the employer. A tip is the sole property of the tipped employee.

Most establishments that offer services, especially restaurants, are wanting to replace tips with service charges. With the tips turned into service charges, the money given by the customers will be directed into the pockets of the business owners. Though this might sound negative, some business owners want to use the service to improve their establishment. In return, there will also be an improvement in terms of serving the customers; which is definitely good. But no matter how good the intentions are, if you don’t let the customer know that the tip he offers won’t be going to the tipped employee, it’s a form of fraud or deceit.  On the other hand, if you explain to the customer the difference between a service charge and a tip, then there’s nothing wrong with it. If the customer still voluntarily pays a fee for the service, the business owner can do whatever he wants with the money, and this is determined by the federal law.

However, if you insist that the tip is to be given to the employee, then it’s all right. The employee can happily receive the gift or money from you. In other countries, the giving and receiving of tips are not allowed. So be sure to know the country’s culture before you hand over your tip. Other countries view tips as a form of bribery which can be insulting for them.

Undoubtedly, good service should be matched with the right compensation. It can come in the form of a tip. But remember, giving tips is not mandatory unlike some service charges. A tip comes from your heart which only shows that you are deeply thankful, while a service charge is more often initiated on the part of the business owner.

Summary:

1. A tip is also called a gratuity. It can be a small amount of money or a gift handed to the employee. The tip is the property of the tipped employee.

2. A service charge or service is the amount of money paid by the customer. Service is not a tip. It becomes the property of the business owner.

3. The employee can do anything with the tip handed to him while the employer can do anything with the service charge paid to his business.

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