Gratuity - Mexico Travel Tips

A gratuity (also called a tip) is a sum of money customarily tendered, in addition to the basic price, to certain service sector workers for a service performed or anticipated. Depending on the country, it may be customary to tip servers in bars and restaurants, taxi drivers, hair stylists, and so on.

Tips and their amount are a matter of social custom and etiquette, and the custom varies between countries and settings. In some locations tipping is discouraged and considered insulting; while in some other locations tipping is expected from customers. The customary amount of a tip can a specific range of monetary amounts or a certain percentage of the bill.

In some circumstances, such as with U.S. government workers or more widely with police officers, receiving gratuities (or even offering them) is illegal, as they may be regarded as bribery. A service charge is sometimes added to bills in restaurants and similar establishments. Tipping may not be expected when a fee is explicitly charged for the service.

Etymology and history

According to the Oxford English Dictionary, the word tip originated as a slang term, and its etymology is unclear. According to the Online Etymology Dictionary, the meaning "give a small present of money" began around 1600, and the meaning "give a gratuity to" is first attested in 1706. The noun in this sense is from 1755. The term in the sense of "to give a gratuity" first appeared in the 18th century. It derived from an earlier sense of tip, meaning "to give; to hand, pass", which originated in the rogues' cant in the 17th century. This sense may have derived from the 16th-century tip meaning "to strike or hit smartly but lightly" (which may have derived from the Low German tippen, "to tap") but this derivation is "very uncertain". The word "tip" was first used as a verb in 1707 in George Farquhar's play The Beaux' Stratagem. Farquhar used the term after it had been "...used in criminal circles as a word meant to imply the unnecessary and gratuitous gifting of something somewhat taboo, like a joke, or a sure bet, or illicit money exchanges."

The practice of tipping began in Tudor England. "By the 17th century, it was expected that overnight guests to private homes would provide sums of money, known as vails, to the host’s servants. Soon afterwards, customers began tipping in London coffeehouses and other commercial establishments."

The etymology for the synonym for tipping, "gratuity", dates back either to the 1520s, from "graciousness", from the French gratuité (14th century) or directly from Medieval Latin gratuitas, "free gift", probably from earlier Latin gratuitus, "free, freely given" . The meaning "money given for favor or services" is first attested in the 1530s.

In some languages, the term translates to "drink money" or similar: for example pourboire in French, Trinkgeld in German, and drikkepenge in Danish. This comes from a custom of inviting a servant to drink a glass in honour of the guest, and paying for it, in order for the guests to show generosity among each other. The term bibalia in Latin was recorded in 1372.

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Tronc

A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade. The person who distributes monies from the tronc is known as the troncmaster. When a tronc exists in the UK, responsibility for deducting pay-as-you-earn taxes from the distribution may lie with the troncmaster rather than the employer. (The word 'tronc' has its origins in the French for collecting box.) In June 2008, the Employment Appeals Tribunal ruled that income from a tronc cannot be counted when assessing whether a wage or salary meets the national minimum wage as a test case Revenue and Customs Commissioners v Annabel’s (Berkeley Square) Ltd.

By region

Asia

China

In China, traditionally there is no tipping. However, hotels that routinely serve foreign tourists allow tipping. An example would be tour guides and associated drivers.

Other exceptions, where tipping is accepted, are Hong Kong, until 1997 a colony of the United Kingdom, and Macau, previously a colony of Portugal.

Japan

In Japan, tipping is not a part of the culture. It is not expected and can cause confusion. Like many other countries in East Asia, Japanese people see tipping as insulting.

South Korea

Tipping is not customary in Korean culture, and tipping is not expected in general service industry. Some people even regard tipping as an inappropriate behavior. High-end hotels and restaurants often include service charge between 10 per cents to 15 per cents, but it is always included in the bill, and customers are not expected to leave separate gratuity for servers beyond what is included in the bill.

Singapore

In Singapore, tipping is not common. Bars and restaurants typically add a 10% service charge although it is not given to the wait staff. Tips are seldom given in a Hawker centre, coffee shop, or taxi.

Taiwan

In Taiwan, tipping is not customary, but all mid and high end restaurants include a mandatory "10% service charge", which is not given to the service staff, but rather considered by Taiwanese law as general revenue, as reported by the Taipei Times in "False Gratuity" on July 9, 2013.

Europe

Albania

Tipping (bakshish) in Albania is very much expected almost everywhere. In recent times it has become more common as many foreigners and Albanians living abroad visit Albania. Leaving a tip of around 10% of the bill is customary in restaurants; even porters, guides and chauffeurs expect tips. If you don't want to leave money for porters, bellhops and the like, duty-free alcohol is often very welcome â€" but this must be doled out with discretion, as some people (such as Muslims) may actually find it offensive.

Croatia

Tips (napojnica, manča, tip) are sometimes expected, mostly in restaurants â€" but they are not mandatory. Restaurant tip is around 3-5% (or more if you are really satisfied with overall dining experience). In clubs or cafe bars, on the other hand, it is common to "round up the bill". It is not common to tip taxi drivers or hairdressers.

Denmark

Tips (drikkepenge, lit. "drinking money") are not required in Denmark since service charges must always be included in the bill by law. Tipping for outstanding service is a matter of choice, but is not expected.

France

Cafes and restaurants include a 15% Service Charge in the bill, as required by French law for tax assessment. Service compris indicates the tip has been added to your bill but sometimes the wait staff do not actually receive any of it. Tipping is better received in venues accustomed to tourists but can be treated with disdain in smaller food establishments and those located in more rural areas. The amount of the tip is also critical. A 5% tip will do nicely for good service. For superior service in higher-end eating establishments, an even more generous tip would not be out of place. However, the rare waiter/waitress accustomed to more generous foreign customers have no problem receiving a tip of up to 10% or more.

Austria and Germany

Tipping (Trinkgeld) is not seen as obligatory, as it is in the United States. In the case of waiting staff, and in the context of a debate about a minimum wage, some people disapprove of tipping and say that it should not substitute for employers paying a good basic wage. But most people in Germany consider tipping to be good manners as well as a way to express gratitude for good service.

It is illegal, and rarely done, to charge a service fee without the customer's consent. But a tip of about 5% - 10%, depending on the type of service, is customary. For example, Germans usually tip their waiters but almost never the cashiers at big supermarkets. As a rule of thumb, the more personal the service, the more common it is to tip. Payments by card can include the tip too, but the tip is usually paid in cash when the card is handed over.

At times, rather than tipping individually, a tipping box is set up. Rounding up the bill in Germany is commonplace, sometimes with the comment stimmt so ("keep the change"), rather than asking for all the change and leaving the tip afterwards. Or the customer says how much he will pay in total, including the tip: thus if the basic price is €10.50, the customer might, rather generously but not unusually, say zwölf ("twelve"), pay with a €20 note and get €8 in change. When paying a small amount, it is common to round up to the nearest euro (e.g. €1.80 to €2.00).

Sometimes you will see a sign reading Aufrunden bitte ("round up please"), in places where tipping is not commonly done (like supermarkets, clothing retailers etc.). This is asking you to have your bill rounded up to the nearest €0.10 (by stating "aufrunden bitte"). This is not to tip the staff, but a charity donation (fighting children poverty), and completely voluntary.

In Germany tips are considered as income but they are taxfree according to § 3 Nr. 51 of the German Income Tax Law.

Hungary

The Hungarian word for tip is borravaló (literally "money for wine", a loose calque from German: Trinkgeld) or colloquially baksis (from Persian: بخشش‎‎ bakhshesh), often written in English as backsheesh. Tipping is widespread in Hungary, the degree of expectation and the expected amount varies with price, type and quality of service, also influenced by the satisfaction of the customer. Like in Germany, rounding up the price to provide a tip is commonplace.

Depending on the situation, tipping might be unusual, optional or expected. Almost all bills include service charge - similarly, some employers calculate into the wage that the employee would receive tips, while others prohibit accepting them. In some cases a tip is only given if the customer is satisfied, in others it is customary to give a given percentage regardless the quality of the service, and there are situations when it is hard to tell the difference from a bribe. Widespread tipping based on loosely defined customs and its almost boundaryless transition into bribery is considered a main factor contributing to corruption. A particular Hungarian case of gratuity is hálapénz ("gratitude money") or paraszolvencia, which is the very much expected â€" almost obligatory though illegal â€" tipping of state-employed physicians (Hungary's healthcare system is almost completely state-run and there is an obligatory social insurance system).

Iceland

In Iceland tipping (þjórfé, lit. "serving money") is not customary and never expected.

Ireland

Tipping is generally optional but often expected for certain types of services. It's customary to tip for table service in bars and restaurants but not for barmen. People generally tip postal workers and sanitation workers around Christmas time. Services like hairdressing, especially for women, often expect tips. Tips are not based on a percentage of the transaction.

Although it has been cited that tipping for taxis is typical, it is not common in practice.

Italy

Tips (la mancia) are not customary in Italy, and used only if a special service is given or as thanks for high quality service. Almost all restaurants (with the notable exception of those in Rome) have a price for the service (called coperto) and waiters do not expect a tip but will not refuse it, especially if given by foreign customers. In cafés, bars, and pubs it's not uncommon, on paying the bill, to leave the change saying to the waiter or to the cashier "tenga il resto" ("keep the change"). Recently tip jars near the cash register are becoming widespread, however in public restrooms they are often forbidden. Leaving the change is also quite common with taxi drivers. When using a credit card, it is not possible to add manually an amount to the bill, so it is possible to leave some coins as a tip.

Norway

Service/service charge is included in the bill. It is uncommon for Norwegians to tip taxi-drivers or cleaning staff at hotels. In restaurants and bars it is more common, but not expected. Tipping is often practiced as a remark of high quality service or as a kind gesture. Tipping is most often done by leaving small change (5-15 %) at the table or rounding up the bill.

Oslo Servitørforbund and Hotell- og Restaurantarbeiderforbundet (The Labor Union for Hotels and Restaurants employees) has multiple times said that they discourage tipping, unless it is a service out of the ordinary, because it makes salaries decreases over time, makes it harder to negotiate salaries and does not count as retirement points, unemployment insurance, loan and other benefits.

The Netherlands (Holland)

Tipping (Fooi) is not seen as mandatory or obligatory, as it is in the United States. Service/service charge is included in the bill. The salaries of personnel are according to the Dutch laws and do not need to be corrected or adjusted by giving a tip.

Romania

The tip (bacÅŸiÅŸ) is usually 5% of the bill and is expected in restaurants, coffee shops, and taxis.

Slovenia

Tipping is not common in Slovenia and most locals don't tip other than to round up to the nearest Euro. Recently, areas visited by a large amount of tourists have begun to accept tips at around 10 - 20%.

Spain

Tipping ("propina") is customary but not generally considered mandatory in Spain and depends on the quality of the service received. In restaurants the amount of the tip, if any, depends mainly on the economic status of the customer and on the kind of locale, higher percentages being expected in upscale restaurants. In bars and small restaurants, Spaniards sometimes leave as a tip the small change left in their plate after paying a bill. Outside the restaurant business, some service providers, such as taxicab drivers, hairdressers and hotel personnel may expect a tipping in an upscale setting. In 2007 the Minister of Economy Pedro Solbes put the blame on the excessive tipping for the increase of the inflation.

Sweden

Tipping (Dricks) is commonly not expected but is practiced as a remark of high quality service or as a kind gesture. Tipping is most often done by leaving small change at the table or rounding up the bill. This is mostly done at restaurants (less often if payment is done at the desk) and in taxi cabs (some taxis are very expensive as there is free pricing, so they might not be tipped). Less often hairdressers are tipped. Tips are taxed in Sweden, but cash tips are not much reported for taxation. Cards are heavily used in Sweden as of the 2010s, and tips paid by cards in restaurants are regularly checked by the tax authority.

Turkey

In Turkey, tipping, or bahşiş (lit. gift, from Persian word بخشش, often rendered in English as "baksheesh") is usually optional and not customary in many places. Though not necessary, a tip of 5-10% is appreciated in restaurants, which is usually paid by "leaving the change". Cab drivers usually do not expect to be tipped, though passengers may round up the fare. A tip of small change may be made to a hotel porter.

United Kingdom

Tips of 10% are common in restaurants, but not compulsory. Sometimes, more often in London and other large cities than in other areas, a service charge may be levied, often of 12.5%. Since it is a legal requirement to include all taxes and other obligatory charges in the prices displayed, a service charge is compulsory only if it is displayed, or the trader makes their presence clear verbally, before the meal. Even so, if the level of service is unacceptable, and in particular it falls short of the Supply of Goods and Services Act 1982, the customer can refuse to pay some or all of a service charge.

The service charge may be included in the bill or added separately. 12.5% is reported as a common amount.

Tipping for other services such as taxis and hairdressers is not expected, but tips are often given to reward good service. In some large cities tips are given to both taxi drivers and hairdressers/barbers, but again this is not expected.

North America and The Caribbean

Canada

Tipping is practiced in Canada in a similar manner to United States. Quebec provides alternate minimum wage schedule for all tipped employees. Some other provinces allow alternate minimum wage schedule for "liquor servers".

According to Wendy Leung from The Globe and Mail, it is a common practice in restaurants to have servers share their tips with other restaurant employees, a process called "tipping out." Another newspaper refers to this as a tip pool.

"Tipping out the house (the restaurant) is occasionally explained as a fee for covering breakage or monetary error[s]."

A Member of the Ontario Provincial Parliament, Michael Prue, has introduced a Bill in the Ontario Legislature regarding tipping.

Canadian Federal tax law considers tips as income. Workers who receive tips are legally required to report the income to the Canada Revenue Agency and pay income tax on it. In July 2012, The Star reported that CRA is concerned with tax evasion. An auditing of 145 servers in four restaurants by CRA mentioned in the report uncovered that among 145 staff audited, CDN $1.7million was unreported. In 2005, The CRA was quoted that it will closely check the tax returns of individuals who would reasonably be expected to be receiving tips to ensure that the tips are reported realistically.

Caribbean

Tipping in the Caribbean varies from island to island. In the Dominican Republic, restaurants add a 10% gratuity and it is customary to tip an extra 10%. In St. Barths, it is expected that you tip 10% to 15% if gratuity isn't already included.

Mexico

Workers in small, economy restaurants usually do not expect a significant tip. However, tipping in Mexico is common in larger, medium and higher end restaurants. It is customary in these establishments to tip not less than 10% but not more than 15% of the bill as a voluntary offering for good service based on the total bill before value added tax, "IVA" in English, VAT. Value added tax is already included in menu or other service industry pricing since Mexican Consumer Law requires the exhibition of final costs for the customer. Thus, the standard tip in Mexico is 11.5% of the pre-tax bill which equates to 10% after tax in most of the Mexican territory, except in special lower tax stimulus economic zones.

A gratuity may be added to the bill without the customer's consent, contrary to the law, either explicitly printed on the bill, or by more surreptitious means alleging local custom, in some restaurants, bars, and night clubs. However, in 2012, officials began a campaign to eradicate this increasingly rampant and abusive practice not only due to it violating Mexican consumer law, but also because frequently it was retained by owners or management.

If a service charge for tip ("propina" or "restaurant service charge") is added, it is a violation of Article 10 of the Mexican Federal Law of the Consumer and Mexican authorities recommend patrons require management to refund or deduct this from their bill. Additionally, in this 2012 Federal initiative to eliminate the illegal add-ons, the government clarified that contrary even to the belief of many Mexicans, that the Mexican legal definition of tips ("propinas") require it be discretionary to pay so that an unsatisfied client is under no obligation to pay anything to insure the legal definition of a tip is consistent with the traditional, cultural definition, and going as far to encourage all victims subject to the increasing illicit practice report the establishments to the PROFECO, the Office of the Federal Prosecutor for the Consumer, for prosecution.

United States

Tipping is a widely practiced social custom in the United States. Tipping by definition is voluntary. In restaurants offering traditional table service, a gratuity of 15% of the amount of a customer’s check is customary when good service is provided. In buffet-style restaurants where the server brings only beverages, 10% is customary. Higher tips may be given for excellent service, and lower tips for mediocre service. In the case of bad or rude service no tip may be given, and the restaurant manager may be notified of the problem. Tips are also generally given for services provided in golf courses, casino, hotels, concierge, food delivery, taxis, spa and salons. This etiquette applies to bar service at weddings and any other event where one is a guest as well. The host should provide appropriate tips to workers at the end of an event; the amount may be negotiated in the contract. Tipping is not required for fast food restaurants, take-out orders, and coffee houses.

The Fair Labor Standards Act defines tippable employees as individuals who customarily and regularly receive tips of $30 or more per month. Federal law permits employers to include tips towards satisfying the difference between employees' hourly wage and minimum wage, although some states and territories provide more generous provisions for tipped employees. For example, laws in Alaska, California, Minnesota, Montana, Nevada, Oregon, Washington, and Guam specify that employees must be paid the full minimum wage of that state/territory (which is equal or higher than the federal minimum wage in these instances) before tips are considered.

A tip pool cannot be allocated to employers, or to employees who do not customarily and regularly receive tips. These non-eligible employees include dishwashers, cooks, chefs, and janitors.

There is only limited information available on levels of tipping. A study at Iowa State University provided data for a suburban restaurant surveyed in the early 1990s. The mean tip was $3.00 on a mean bill of $19.78. As such, the mean tip rate was 16.1%, and the median tip rate was about 15%. In a 2003 research study at Brigham Young University, the sample restaurants had an average tip percentage ranging from 13.57 to 14.69% between 1999-2002.

Service charges

Service charges are mandatory payments, typically added by caterers and banqueters. Restaurants commonly add it to checks for large parties. Some bars have decided to include service charge as well, for example in Manhattan, New York. Disclosure of service charge is required by law in some places, such as in State of Florida A standard predetermined percent, often ~18%, is sometimes labeled as a "service charge".

History

Until the early 20th century, Americans viewed tipping as inconsistent with the values of an egalitarian, democratic society. Also, proprietors regarded tips as equivalent to bribing an employee to do something that was otherwise forbidden, such as tipping a waiter to get an extra large portion of food. The introduction of Prohibition in 1919 had an enormous impact on hotels and restaurants, who lost the revenue of selling alcoholic beverages. The resulting financial pressure caused proprietors to welcome tips, as a way of supplementing employee wages. Contrary to popular belief, tipping did not arise because of servers' low wages, because the occupation of waiter (server) was fairly well paid in the era when tipping became institutionalized.

In spite of the trend toward tipping as obligatory behavior, six states, mainly in the South, passed laws that made tipping illegal. Enforcement of anti-tipping laws was problematic. The earliest of these laws was passed in 1909 (Washington), and the last of these laws was repealed in 1926 (Mississippi).

Taxation

Tips are considered income. The entire tip amount is treated as earned wages with the exception of months in which tip income was under $20. Research finds that consistent tax evasion by waitstaff due to fraudulent declaration is a concern in the US. According to the IRS, at least 40% of tips to waiters are not reported for taxation.

An IRS audit was triggered by major discrepancies between employees' declared tip percentage and the percentage from credit card slips maintained by the business. It was discovered that employees of Fior D'Italia in San Francisco were significantly under-reporting their tip income. The average tip amount as computed by IRS through calculating the average of credit card slips for 1991 and 1992 were 14.4 and 14.29% respectively. IRS applied those rates toward all sales including cash sales to estimate the actual tip. Reported tip amount was subtracted from the estimated amount to estimate tax evasion. Based on these calculations, Fior D'Italia underreported tip income by 38.8% in 1991 and 40.0% in 1992.

US federal employees

The US Government recognizes tips as allowable expenses for federal employee travel. However, US law prohibits federal employees from receiving tips under Standards of Ethical Conduct. Asking for, accepting or agreeing to take anything of value that influences the performance of an official act is not allowed.

South America

Bolivia

Service charges are included with the bill. A tip of around 5% or so is sometimes given, and is considered polite.

Paraguay

Service charges are included with the bill, and tipping is uncommon.

Oceania

Australia

Tipping is not the norm in Australia. The minimum wage in Australia is generally A$16.37 per hour (A$20.30 for casual employees) and this is fairly standard across all types of venues.

Tipping at cafes and restaurants (especially for a large party), and tipping of taxi drivers and home food deliverers is common, but not an expectation. Such tips are usually around 10%, or for small bills, along the lines of "keep the change".

Tipping staff of any other kind of business is very unusual. There is no tradition of tipping somebody who is just providing a service (e.g. a hotel porter). Casinos in Australiaâ€"and some other placesâ€"generally prohibit tipping of gaming staff, as it is considered bribery. For example, in the state of Tasmania, the Gaming Control Act 1993 states in section 56 (4): "it is a condition of every special employee's licence that the special employee must not solicit or accept any gratuity, consideration or other benefit from a patron in a gaming area."

There is concern that tipping might become more common in Australia.

New Zealand

Tipping is not a traditional practice in New Zealand, though has become more prevalent in recent years â€" especially in finer establishments. Tipping in New Zealand is likely the result of tourists visiting from tipping cultures (such as the United States of America) who may follow their own tipping customs. Where tipping does occur among New Zealanders it is usually to reward a level of service that is in excess of the customer's expectations, or as an unsolicited reward for a voluntary act of service. A number of websites published by the New Zealand government advise tourists that "tipping in New Zealand is not obligatory â€" even in restaurants and bars. However, tipping for good service or kindness is at the discretion of the visitor". A Sunday Star-Times reader poll in 2011 indicated 90% of their readers did not want tipping for good service to become the norm in New Zealand

Perspectives

Percentage-based gratuities

In countries where tipping is the norm, such as in the US, Canada, and in a few countries in Western Europe, some employers pay workers with the expectation that their wages will be supplemented by tips. Some have criticized the inherent "social awkwardness" in transactions that involve tipping, the inconsistency of tipping for some services but not similar ones, and the irrationality of basing tips on price, rather than the amount and quality of service (a customer pays a larger tip to a server bringing him a lobster rather than a hamburger, for example).

Cases where no gratuity is expected

Tipping may not be expected when a fee is explicitly charged for the service.

Mandatory tipping

A service charge is sometimes added to bills in restaurants and similar establishments. Attempts to hide service charge by obstructing the line on the receipt has been reported.

In the United States, criminal charges were dropped in two separate cases over non-payment of mandatory gratuities. Courts ruled that automatic does not mean mandatory. Some cruise lines charge their patrons $10/day in mandatory tipping; this does not include extra gratuities for alcoholic beverages.

Bribery and corruption

Bribery and corruption are sometimes disguised as tipping. In some developing countries, police officers, border guards, and other civil servants openly solicit tips, gifts and dubious fees using a variety of local euphemisms.

Other perspectives

An academic paper by Steven Holland calls tipping "...an effective mechanism for risk sharing and welfare improvement" which reduces the risk faced by a service customer, because the customer can decide whether or not to tip.

Tipping is sometimes given as an example of the principal-agent problem in economics. One example is a restaurant owner who engages servers to act as agents on his or her behalf. In some cases, "[c]ompensation agreements [can] increase worker effort...if compensation is ...tied to the firm's success"; one example of such a compensation agreement is waiters and waitresses who are paid tips.