Accepting tips and service Cost: how-tos and legal Obligations
If you work in hospitality, odds are you will want to accept gratuities from clients. But how should you go about doing so?
Firstly, you want to choose whether to accept tips or service cost.
Service charge: A percentage fee added to the invoice by the company for the support received.
Hint: Voluntary cash given from the client to the employee/business for the support received.
Each one of these are accepted in various ways and bear unique duties -- let's go through it.
For those who have a card machine, it will normally have the choice to change on a tipping purpose prompting the payer to add a tip directly on the terminal. It might work like this: if the payment is entered on the terminal keypad or delivered to the terminal from an integrated EPOS system, it will initially autodisplay a query to the plaintiff, such as"Insert suggestion?" The plaintiff can then input a hint amount manually before proceeding to enter the PIN or tap to cover. In this manner, the customer doesn't need to face the server about the trick directly -- they simply enter quietly and cover.
Some POS software permits you to add a hint on the touchscreen interface of the till. If paying in cash, the client can verbally say in the till just how much they would like to include or just leave some change after paying the bill. In the majority of cases where food and beverages are served, the consumer would leave too much money on the invoice receipt before leaving -- that could be the tip the waiter or waitress can keep, place in a tronc or enroll at the till.
A so-called tronc is your location -- typically a collection box or tip jar -- where all staff members shop their hints for after distribution among themselves. For those who have a tronc, it ought to be administered by a troncmaster (worker responsible for the tips). It's necessary to have a policy of how that is handled, counted and divided.
How to take service charge
There are certain requirements around compulsory and optional service charges:
Compulsory service charge: This has to be stated to the client in advance of being served, either on the menu or by the staff. The client is then required to cover it unless the service was below a reasonable standard, in which case they are permitted to refuse paying the whole or portion of their service charge. If the customer wasn't clearly made aware of the compulsory charge ahead of ordering, they can also refuse to cover it.
Discretionary service cost: this may be added to the invoice without a clear warning beforehand, preferably stating it's discretionary. As with compulsory service fees, the client can refuse to cover it if the service fell below the expected standard, and also because they weren't made conscious of the additional charge ahead of time.
When you have determined what the service fee should be, you can from the POS system add that percentage to all invoices under the tag"optional service charge" or simply"service fee". If the customer takes the fee, they will just pay the total with no comments. If they disagree with the fee, your POS system should be able to delete that charge from the invoice and publish a new receipt if asked.
Your responsibility to employees and HMRC
The principles of tipping apply to more businesses than food-and-drink and resorts -- some cab drivers, hairdressers, beauty salons and gaming stores, as an example.
Money tips are the property of their staff, not the enterprise. Having said that, the company may have a say in how the team administers the shift amongst themselves, if they ought to pool and discuss it or let gratuities visit the man who got it. But crucially, the corporation can't direct it from the management level.
Card tips and service fees belong to the company owner with no legal duty to pass it on to employees. Needless to say, many still do, but firms will each have different perspectives on this.
Who is accountable for ensuring tax is paid?
- Money tips given to worker: The employee
- Money tips pooled by company: The employer
- Card tips distributed by company: The employer
- Compulsory & optional service charge: The employer
Regardless, clients have a right to understand what happens to the service cost or hints, and you need to have a clear response ready for those asking.
Tips, service cost, gratuity or cover charge -- not one of them count towards the minimum wage (or National Living Wage, for that matter), but taxes must be paid on them. This means your employees need to possess the minimum wage paid as standard and any suggestions given to them in addition to that.
Compulsory service fees should be treated like PAYE salary if paid to the worker.
If card and money tips are pooled together and spread by a troncmaster, it's the troncmaster who's responsible for ensuring Income Tax is paid on the hints. If the employer pools and spreads the card tips or voluntary service fees among the team, it's the employer who must make certain Income Tax -- and in this case, National Insurance also -- is paid through PAYE.
For those who have a troncmaster, it's the business' duty to inform HMRC that there is a tronc and that the troncmaster is.
Your staff is responsible for paying tax (no National Insurance, in this instance ) in their cash tips received directly from clients. Since the trick change is officially the worker's property, the company shouldn't get involved in this, though it's good to offer guidance about the best way best to declare the tax.