Introduction
Discrimination
Direct and indirect discrimination
Alternatives
Comment


Introduction

The government has recently announced a consultation on tipping. The stated objectives of the proposals are as follows:

  • All discretionary payments for service should be voluntary to the consumer;
  • All discretionary payments for service should be received, in full, by workers where appropriate; and
  • The allocation of such payments should be transparent to the consumer.

The consultation follows a call for evidence last year and aims to come up with ways to reduce the confusion that customers often experience, such as who ends up receiving the service charge, how it must be paid and whether cash should be left as well. While these are all important issues, another issue that arises from the tipping custom is neither dealt with nor discussed by anyone: could the practice be discriminatory?

Discrimination

Michael Lynn is a world-renowned expert on tipping and is currently the Burton M Sack professor of food and beverage management at the Cornell University School of Hotel Administration. Some years ago, he conducted research at a restaurant in the United States and found that there is vast inequality in tipping. Lynn found that:

  • attractive female waiting staff received higher tips than less attractive female waiting staff, while the attractiveness of male waiting staff tended to be less of a factor;
  • male waiting staff received higher tips from female customers than male customers, while inversely, female waiting staff received higher tips from male customers than female customers;
  • blondes received higher tips than brunettes;
  • slender women received higher tips than heavier women; and
  • women in their 30s received higher tips than those in any other age group.

Lynn also found evidence of racial discrimination in tipping, noting that:

  • black waiting staff received the lowest tips; and
  • both white and black customers gave higher tips to white waiting staff than to black waiting staff.

In other words, black and non-white servers generally received fewer tips compared with white servers, no matter who was tipping.

Lynn's findings are fascinating, although fairly anecdotal – they were based on a study of just one restaurant in the United States. However, the results are in line with other findings. For example, research has indicated that in the United States, consumers generally prefer to be served by someone of their own – or a similar – racial group when shopping.

On the face of it, discrimination abounds. But should this issue concern employers?

Direct or indirect discrimination?

Direct discrimination occurs when someone suffers less favourable treatment because of a protected characteristic. If a customer decides not to tip someone because he or she is older, or a different race or gender than someone whom they would have tipped, this would be considered direct age, race or gender discrimination. However, in this instance, the discrimination is coming from a customer, not the employer: the employer in this scenario is unlikely to be liable for direct discrimination.

However, depending on how the employer's tipping system works, there could be an argument that the system amounts to a provision, criterion or practice (PCP). Where this PCP puts older, non-white or female employees at a disadvantage, this is likely to amount to indirect discrimination. So, if an employer's PCP allows staff to be paid cash tips and customers favour giving higher tips to people with particular characteristics, this could amount to discrimination for which the employer could be liable.

In order to justify this PCP and avoid a finding of discrimination, the employer would have to show that the operation of the tipping system was a proportionate means of achieving a legitimate aim. It could potentially do this by asserting that tipping on an individual basis was a business necessity.

But even if it were able to find a legitimate aim behind a cash tips policy, the employer would also have to show that there was no other, less discriminatory way of achieving this legitimate aim. This could be difficult because there are other alternatives.

Alternatives

Operating a tip sharing system, such as a tronc, would remove any disadvantage that some staff might suffer. Under this system, all tips are pooled and shared out, so any discrimination from customers is eliminated. While troncs are often used only for non-cash tips that come from credit cards, they can operate to the effect that cash tips are also included.

Alternatively, employers could consider implementing one of the following policies:

  • adding a voluntary service charge to the bill;
  • banning additional cash tipping; or
  • banning all tipping (and simply donating any bill surpluses to charity).

Comment

A tipping system which is open to discrimination by customers – whether intentional or not – could become the employer's problem. Group claims, for example, could be brought against employers by waiting staff in the hospitality industry (although the high fees involved in bringing an employment tribunal claim reduce these chances significantly). But even if such a claim were only alleged and not submitted, there could still be significant adverse publicity for the employer.

The government's consultation is an opportunity for employers to rethink their tipping practices. Employers may also want to think about how to minimise potential discrimination risks. If employers want to continue to allow customers to offer cash tips, there are steps they should consider to distance themselves from any liability. Employers should consider including provisions in employment contracts and policies that make it clear that any cash tips are between the customer and the employee, and are nothing to do with the employer. While such a statement would give the employer a small amount of extra protection against discrimination risk, it might provide greater cover in the court of public opinion.