Who actually gets the tip you leave? House tipping gets heated in service industry

Click to play video: 'How should tipping be handled in Alberta?'
How should tipping be handled in Alberta?
WATCH: A number of groups are speaking on the topic of tipping. Fletcher Kent reports – Sep 7, 2018

For 12 years, Tracy Whatmore worked as a server and much of what she earned came through tips. According to Whatmore, tips paid for her tuition to business school, for her kids’ daycare bills and for her car.

In every place she had worked, tips among servers were shared. Whatmore said she saw many different ways of dividing up that money.

She said she feels some employers were more fair than others. At some places, part of the tip went to managers.

“The fair way to deal with that was to keep it with all of the support staff and not so much [with] the managers who are earning a salary,” Whatmore said.
Story continues below advertisement

More and more lately, those in the service industry have began complaining about certain house tipping policies.

Daniel Huber — known as theBurlyChef online — is a chef and a restaurant consultant. He is also very outspoken on what he considers the seamy side of the service industry. Huber is formally campaigning for rules that would govern house tipping.

“If you work hard and you make that money, then that money should be yours,” Huber said.

His advocacy recently landed Huber in hot water.

Last week, he named the Sherlock Holmes Hospitality Group in a number of tweets, criticizing their tipping policy. Huber said he then received a cease and desist letter from the company’s lawyers.

“I got a big knot in my stomach, which I think was the point,” Huber said.

The letter also corrected Huber on just what the company does with its tips.

READ MORE: Customers fear ‘tip shaming’ as gratuity expectations grow

The “policy requires front of house service staff to tip out 4 per cent directly as follows: bartenders (2 per cent) and back of house staff (two per cent). An additional 3.5 per cent is tipped out to a house redistribution fund. The house redistribution fund is then paid out to back of house staff, supervisors and managers as wages. No part of this house redistribution fund is allocated to owners whatsoever,” the letter read.

Story continues below advertisement

When Huber read this clarification, he said he felt his original concerns were justified. Huber said he’s fine sharing tips with bartenders and back of house staff.

“The letter affirms the fact they’re taking 3.5 per cent from staff,” Huber said, adding he wants the province to step in and help.

“I would say our labour minister in Alberta has all the information she needs on hand to rectify all of these issues,” he said.

Other special interest groups are calling for the same thing. The Alberta Federation of Labour has launched its own campaign.

Inside Duggan’s Boundary Irish Pub, one of the ownership group’s properties, Peter Gouveia defends the company’s practices.

“All that we collect is being redistributed back to our staff through that mechanism — through payroll — is essentially what it is,” Gouveia said.

He said when his ownership group purchased the pubs, they sat down with staff and talked about what to do with tips. The bars had always pooled tip money.

What was new was a move to what they called “controlled tipping:” a practice that sees a percentage of the money go into the company’s books. The money is then declared as revenue and paid out as wages.

Story continues below advertisement

In this case, 3.5 per cent was shared with staff, which included managers and supervisors. Gouveia argues that practice is fair — arguing that tips stem from a good customer experience and that happens thanks to an entire team — so the whole team should share in this pool of money.

Gouveia appreciates how contentious the issue is as tips represent a lot of money. He said tips collected by hospitality groups amount to three times the company’s profit and by distributing that money — no matter how it’s done — will mean unhappy people. Gouveia said he thinks the hospitality group has struck the right balance.

However, despite the legal tensions and the differences in opinion between Gouveia and Huber, the two do agree on one thing: direction on how to divide this wealth couldn’t hurt.

“It would be great. It would be great if they did intervene and create a Coles’ Notes of how this has to be managed.”

Currently, there is very little legislation governing what can happen to tips. They’re not considered wages so there are no employment standards rules.

Huber has met with Alberta’s Labour Minister Christina Gray to voice his concerns.

Story continues below advertisement

Gray said she is interested in hearing more about the issue from everyone involved.

“We’re happy to continue to move that forward and have those conversations and hear more people from the people who are concerned they’re not being treated fairly,” Gray said.

No plans for legislation are currently in the works.

Sponsored content