Can making a tiered tipping system ever be ethical?

November 9, 2012 3:57 AM

Is it ethical for employers and managers to tier the tips of servers and bar staff as a means of creating an "incentive" programme?

Hey Mefites!
So recently, the small café that I work at in the UK has implemented a new tipping policy that pools all tips at the end of the month and then tiers them, so that the newer employees get less while the employees who have been working there longer get more. The idea is that by placing the newer employees on a probationary period with tips, we are increasing their incentive to work harder.
However, this idea is problematic for this café because all of the "newer" employees have already been working there for 2 months or more, and all the employees with more experience are managers. This means the "newer" employees will be handling the majority of customer service without seeing any financial benefit from it.
As I'm not familiar with the service industry in the UK, is this something that is even remotely ethical for an employer to do? I have spoken to most of the employees and even the older ones seem to agree that this policy is ridiculous, especially when wages are already minimum.
We all really love working at this space and would hate to leave, so if this is in fact unethical, are there any measures I can take to make sure this doesn't happen? Is there anything I can say to the owner that might change his mind?

Thanks so much for your input!

posted by _superconductor to work & money (19 answers total)

This is indeed pretty ridiculous, the standard debates over the splitting of communal tips are usually about whether back of the house personnel - like cooks – receive a share of tips at all, not a bigger share and generally not including managers.
posted by Blasdelb at 4:17 AM on November 9, 2012

Yes, it's definitely unethical. This is the Animal Farm version of society -- you pool your tips because everyone is equal, but the senior employees are more equal than everyone else.

Incentive to work harder? How? To get a slightly larger chunk of what you just earned as a tip? Not tiering does that as well. This only incentivizes staying at the cafe for the idea of more money in the future instead of quitting now and working somewhere else with a better policy. My experience in the service industry is that no one becomes a server with hopes of making it a career, so this doesn't incentivize anyone who is likely to be the target.

I would tell the owner that this policy is a sad comment on his attitudes toward his junior staffers, and if he's hoping for continuity in his cafe waitstaff, treating the junior staffers like second-class citizens is exactly the wrong way to do it.
posted by Etrigan at 4:19 AM on November 9, 2012 [1 favorite]

Who implemented or advocated for this program? Because it sounds like it really only incentivizes them.

Anyways, a simple practical argument against this is that it makes this job look less appealing to experienced waitstaff compared to other jobs with equitable tip splitting. You're going to get less experienced people applying to the positio.
posted by Mercaptan at 4:33 AM on November 9, 2012 [1 favorite]

I would tell the owner that this policy is a sad comment on his attitudes toward his junior staffers, and if he's hoping for continuity in his cafe waitstaff, treating the junior staffers like second-class citizens is exactly the wrong way to do it.

I wouldn't say it this way - unless you have a very close relationship with your boss, it sounds aggressive and confrontational and I suspect it would put him on the defensive immediately and make him less likely to listen to your concerns.

I would suggest couching it in a more "I'm concerned that your new policy is not going to accomplish the goals that you are trying to accomplish" way. Tell him "I've been talking to the newer employees, and none of them feels that they'd be motivated to work harder because of this policy. In fact, some of them feel quite the opposite because they'd be seeing less profit for the work they do. Maybe we should talk about ways in which this could be done that might be more effective?" Or if you're having a staff meeting about the issue and can talk to the other new servers ahead of time, arrive with a plan that you're going to say "Who here would feel motivated to work harder under this new policy?" And none of them would raise their hand. (Or at least somehow present a group front that the policy is not going to work, and try to point out that it is going to make people resentful as well).
posted by treehorn+bunny at 4:38 AM on November 9, 2012

Isn't this what raises are for? They can "tier" the paychecks, but this isn't what tipping is, to my understanding. In fact, if I knew a restaurant I liked was doing things like this, I'd probably stop eating there.
posted by amtho at 4:56 AM on November 9, 2012 [6 favorites]

Totally unfair.
posted by Flood at 5:04 AM on November 9, 2012

Yeah, this is sketchy. I worked in few places where pooled tips weren't split with new employees during their first 2 or 3 training shifts only and they were considered equal after that. The only job I ever had where the manager got a cut of the tips was in one restaurant where the manager actually did the same work as the wait staff but also had extra responsibilities (for which she was paid a higher hourly rate and worked a few more hours a week).

You say you're all in agreement at your workplace that this policy is silly. Is there any way you can present this to your employer as a united front? Depends on your work culture, but I've worked in places where the owners sometimes made ridiculous decisions like this without realizing the negatives of it, but we felt comfortable enough to speak up about it. In the two places I'm thinking of, the owner would have valued our input enough to alter or reverse the decision entirely if we kicked up enough of a fuss. Again, depends on the relationship you have with your employer.
posted by futureisunwritten at 5:11 AM on November 9, 2012

I would express to the manager a concern that customers would not like this arrangement, and surely family members of the staff are customers so the word's bound to get out.
- When I leave a tip, I assume it is going to the waitstaff, not their manager.
- If I were a customer, I'd give my tip in cash and ask the waitperson to stuff it in their pocket or shoe instead of donating it to the pool to be divvied up by bosses.
- If I were a new waitress, getting crappy hours and wanting to better my situation, I'd maybe try to funnel more money to the bosses to get a later competitive edge.
- If both older and newer staff do not like this program, compliance will be low.
- If I were looking for a waitstaff job and heard that I would basically be forking over my tips at that cafe due to being new, I'd not apply because I could do better at any other place.

Surely a manager can see the problems with this.
posted by Houstonian at 5:13 AM on November 9, 2012 [4 favorites]

How much of a server's restaurant income in the UK derives from tipping? I've always supposed it was very minor.

In the US, where the vast majority of the server's restaurant income derives from tipping, there are more or less two methods of tip allocation: The most common is that each server keeps his/her tips and then has to "tip out" other front of the house workers (e.g., bar staff and bussers) according to variously determined formulae. Other places, presumably to promote teamwork, they do what is called "tip pooling" in which all the tips are put into a common pool and all the front of house workers are allocated percentages of the pool depending on their job that night (e.g., servers get more than the bussers) with all the members of each "tier" getting an equal allocation. Managers and owners never receive tip money. This may even be against the law here, but it is certainly a huge ethical problem. There have been big scandals when it has been revealed that management at a "tip pooling" restaurant were allocating some of the tip money to themselves.

Clearly the owner at this place is trying to reward long-term loyalty by allocating more tip money to employees of long standing. But what he should really be doing is giving those employees a higher salary. The problem, from his perspective, is that the current system rewards employees with seniority out of your pocket whereas paying higher salaries rewards these employees out of his pocket. Management should never take tips.
posted by slkinsey at 5:26 AM on November 9, 2012 [5 favorites]

I think that everyone knows that it's a terrible way to incent people. Why work harder? All I have to do is be here long enough and I'll get more tips anyway.

I don't think this is an ethical issue. It's just a shitty idea.

I'm kind of surprised that the managers are taking a cut of the waitstaff's tips at all. Managers have a set salary, whears in the US, waitstaff derrive most of their income from tips.

For sure, start looking for a new gig, and be sure to tell them when you go that the tip thing was the reason for your leaving.
posted by Ruthless Bunny at 6:01 AM on November 9, 2012 [1 favorite]

I do not think that this is an issue of ethics.

This practice is actually fairly common, and not just in the service industry. For example, in law firms, the associates and contract partners are paid a fixed salary, while the profits they generate are shared by the equity partners. This is also often the case in medical practices, accounting firms, and other such professions. This is why people crave advancement.

The distinction about tip money being "your money" and wages being "the cafe's money" is false. At least in the US, restaurants have fairly strict internal revenue reporting requirements regarding tips. The employer doesn't get to not report it because it's "not the cafe's money". Of course, this may not be the case in the UK, but I would be surprised to learn that.
posted by Tanizaki at 6:50 AM on November 9, 2012 [1 favorite]

I don't see how this:

newer employees get less while the employees who have been working there longer get more.

leads to this:

The idea is that by placing the newer employees on a probationary period with tips, we are increasing their incentive to work harder.


Time employed has nothing to do with how hard you work. If you want to encourage people to work hard, then give them bonuses for working hard (whatever that means).

If anything, this just incentives people to find newer employees to hire and to try and force the old ones out, right? It's like the MLM of tip sharing.
posted by Nonsteroidal Anti-Inflammatory Drug at 7:23 AM on November 9, 2012 [1 favorite]

The distinction about tip money being "your money" and wages being "the cafe's money" is false. At least in the US, restaurants have fairly strict internal revenue reporting requirements regarding tips. The employer doesn't get to not report it because it's "not the cafe's money". Of course, this may not be the case in the UK, but I would be surprised to learn that.

The restaurant's reporting obligations in no way impact whose money it is. Tip money received in a restaurant does not constitute income for the restaurant.

In New York State, it is against the law for a restaurant or restaurant management to keep any tip money (other than a small percentage for credit card processing if it the tip was charged). I'd say that makes the tip money "not the restaurant's money."
posted by slkinsey at 7:24 AM on November 9, 2012 [1 favorite]

Grossly unethical.
posted by batmonkey at 7:42 AM on November 9, 2012

In many US states this would be illegal for a place that "paid tips"

It is also clear they don't understand what the word "incentive" means.

The real question is how much is this worth to you? Are you in a position to change this?
posted by French Fry at 7:55 AM on November 9, 2012 [1 favorite]

Are you in a position to change this?

No, I'm actually one of the newer employees, but my concern has earned the support of every person working alongside me. We have decided to send a letter to the owner, with me being the one writing it.

Who implemented or advocated for this program? Because it sounds like it really only incentivizes them.

It was the manager who advocated the policy, and they did so without conferring with any other members of staff beforehand. There are already a few coworkers who are upset with the manager receiving tips to begin with.
posted by _superconductor at 8:03 AM on November 9, 2012

As a slight derail, but I hope a helpful one: as a customer I try to be aware of chains that pool tips, or use them to enhance wages. (There was a little bit of publicity about it a while back.) It's why I'll always tip in cash, even if I'm paying by card.

If I knew that this sort of thing was happening, I'd try to give a good server a tip and specify it was for them only. After all they're the person representing the business well to me. If there's a subtle way you could signal this to customers (or maybe get publicity locally) that would help your customers make that decision. I also kinda assume management types get better wages and don't need tips in the same way that servers do.

Finally I have worked in a service role, although not food industry. Tips were given, and were divided up as the customer decided. This was done by the end of the day - not a month later!
posted by SuckPoppet at 9:20 AM on November 9, 2012

I would keep the point of the letter focussed on the manager not sharing in the tips at all. I would also consider a name-and-shame campaign. Does the manager have a boss?
posted by rhizome at 10:17 AM on November 9, 2012

I think this is a very sucky plan, and I'd not work at a place that did this, nor patronize it if I heard about it. No question, it will end up hurting morale and they level of people they'll be able to hire.
posted by BibiRose at 10:28 AM on November 9, 2012 [1 favorite]