The exact derivation of tipping, or leaving a gratuity, is unknown. The word tips can be an acronym for “to insure proper service,” but it is rumored to originate from the phrase “tipping the scales,” as in a bribe. Whatever its origin, a tip or gratuity plays a large part in event planning today. It is important you understand how your company handles gratuities and distributes them to staff. It is also important to know the type of gratuities and who is entitled to this money.

Understanding Gratuities

A tip is a gesture or payment for good service. All types of positions in the service industry accept tips. Taxi drivers, bellmen, hairdressers, and valets all accept tips. In the restaurant industry, however, tips are the most prevalent. All countries have different customs regarding gratuities, but in the United States a server receives a tip in a restaurant as part of his salary. A standard gratuity is 10 to 20 percent of the before-tax bill. The tip is then dispersed among the service staff, with a small percentage going to the food runner, bartender, busser, and occasionally the hostess. A server is only instructed to tip out his support staff; the kitchen is not part of the support staff and usually does not get a percentage of the gratuity.

Tips in Event Planning

It is likely your service staff will get compensated in one of two ways. In some banquet halls and catering companies, the servers make a straight hourly wage. The average wage is $15 to $30 an hour for servers and bartenders. The client is charged for the hourly staff in addition to the food and beverage. Quite often the client will give the service staff an extra gratuity for good service. If this tip goes through you or your company, it is important the money goes directly to your staff. Your company cannot benefit or profit from this tip.

The second way a server can be compensated is by a small wage paid by your company. Most servers make minimum wage. In addition to this wage, your support staff will divvy up an automatic gratuity that gets charged to the client. Industry standard is 15 to 20 percent of the food and beverage bill. A company cannot automatically add gratuity to tax or a room charge. Again, the support staff receives the gratuity in its entirety. The tip does not filter down to the kitchen staff.

In some cases, a management fee or administration fee is added to the hourly employee charge. The management or administration fee can also be added to the automatic gratuity. These fees are usually used to compensate the event planner's salary or incentive program. In some cases, a company may choose to charge a higher percentage of gratuities and give a portion to the event planner. For example, an invoice to a client may state a standard gratuity of 21 percent is added to the food and beverage portion of the bill. Out of this portion, the server would receive 18 percent and the event planner would receive 3 percent.