ABSTRACT
The extent to which tips increase gross pay or total reward is highly variable (see Case study 5.7), and appears to be higher where the employee has more control, i.e. takes tips individually. Purcell et al. (1999) found that workers in pubs and bars could enhance their hourly pay by up to £2.00 per hour in larger establishments and by up to £1.00 per hour in smaller establishments. Restaurant workers could only achieve up to £1.00 per hour, but only for evening work in busy city centre establishments, and also received very few fringe benefits. In hotels where an employee sharing system or employer distribution of tips is the norm, tips amount to less, but other terms and conditions are generally better. Case study 5.8 illustrates how tips distributed from a tronc relate to status, and may give greatest benefit to those staff with no direct customer interface who are already
Low pay serves the immediate mutual interests of employer and employee as an avoidance strategy for employment taxes, but this may have other longer-term and more damaging consequences. Avoidance maximizes employees’ net pay and minimizes employers’ labour costs, but employees are not eligible for a range of benefits, including pensions.
