This story reminded me of a topic I've been meaning to write about for a long time. It follows on from the staggering $5.25m settlement which Mario Batali was forced to hand over to his staff in unpaid tips.
Tips are a huge issue in restaurants all over the world, despite the vast cultural differences which exist. In the U.S for example, the Federal minimum wage for waiting staff is just $2.13 per hour, increasing to $7.25 per hour inclusive of tips. Each state has their own local agreements in place and many pay more than these figures, depending on the demand for labour. This area is tightly regulated, and heavily unionised. This is in stark contrast to the unregulated vacuum which exists in Ireland.
Up until 2013, we had Joint Labour Committee Registered Employment Agreements ( REAs) in place, which set legally enforceable rates of pay for staff in the restaurant industry. In addition to the minimum wage, staff who worked Sundays for example, were entitled to double time. Despite the fact that REAs were deemed unconstitutional by the Supreme Court in 2013, precedent dictates that most restaurants still pay the same rates. When you consider that our minimum wage is €8.75, it should be no surprise that so many restaurants close on Sundays and Bank Holidays.
The average Irish waiter takes home approximately 3 times the basic pay of their counterparts across the Atlantic. When it comes to tips however, it's a different story altogether. In America, there is an expectation that customers will leave at least 15% of their bill as a tip. 20% would be closer to the norm. This money is used to top up the staff's basic taxable pay, and may explain why they get so upset if someone leaves without tipping.
In Ireland, there is an ad hoc approach to tipping, and whether or not a waiter earns good tips is usually dependent on multiple factors, most of which are outside of their control. Firstly, Irish people historically, have not been good tippers. This has slowly changed over the last 15 years or so, but in my experience, only Dublin shows signs of having a stable tipping culture. My advice to Dublin based clients, is that their tips should always be a minimum 10% of their turnover. Otherwise, they have an issue that needs to be addressed. This has proved true for every case I've come across.
So in Ireland, when you hand over your tip in cash or on card at the end of your meal, where does that money go? Well, what should happen is that the tips are pooled, divided amongst all staff using a fair, transparent system, and taxed through the payroll. What actually happens seems to vary from restaurant to restaurant. In most cases, cash tips are divided up amongst the staff, card tips and service charge ( minus the bank charges) are paid through the payroll and taxed. I've spoken to Revenue in the past about this, and they unofficially turn a blind eye to cash tips because they have no way of policing them.
In some cases however, unscrupulous owners keep the tips and use them to pay the staff. Others give the staff a percentage of the tips and pocket the rest for themselves. I'm firmly of the opinion that if a restaurant is busy and the staff are making plenty of tips, it's a win win for everyone. Owners who treat their staff poorly over tips, or any other issue, usually end up paying for it in the long run.
I can see all sides of the problem having been a waiter, an owner and a diner. I've always let my managers deal with tips once their system was fair and transparent. As a diner, I always leave a tip, and try to always leave cash. When you leave a tip on a card, the bank takes a bite, then Revenue, and your server ends up with a fraction of what you intended them to have.
From a restaurants point of view, if you do not have a clear, coherent policy in place for the distribution of tips, then I suggest you implement one. As a minimum, it will spare you a lot of headaches and boost staff morale. I bet Mr. Keller and Mr. Batali now wish they had given the issue more consideration.