A few top tips on the art of gratuities

Changes to the law and customs have left consumers more bewildered than ever. Few realise their service charge could go to pay a restaurant's breakages. And if you are paying a small fortune at an upmarket salon, are you still meant to tip the senior stylist, who may be earning a multiple of your hourly rate?

Tipping matters because worldwide it is a multi-billion pound phenomenon, which oils the wheels of many economies. Its origin is unknown, with one theory dating it back to Roman times. However, it became prevalent in City of London coffee houses during the 18th century as modern commerce took off.

Many people hate the process. Some 100,000 travelling salesmen in the US formed the Anti-Tipping Society of America early in the last century and managed to have the custom abolished in seven states from 1905 to 1919, before it returned again with a vengeance.

In the UK, a humdinger of a row exploded when it was discovered that many restaurants were using tips to subsidise the company's obligation to pay staff the basic minimum wage level. In other words, whoever served you benefited not one iota from your generosity.

The law was changed last October, stopping this practice. Alas, six months after its implementation, diners are still none the wiser about who is benefiting from their gratuity, as the position of service charges has been left as clear as mud.

Many restaurants will automatically add a discretionary service charge of between 10 and 15 per cent to your bill. Customers should remember they do not have to pay this fee.

If you decide to pay it, be under no illusion about what may be happening to your cash.

Miles Quest, of the British Hospitality Association, says: "If you leave money on your credit card as a service charge, that money belongs to the restaurant."

Many restaurants will pass on some, but not all, to their staff. Indeed, there is no legal requirement for the restaurant to allocate any proportion of the service charge to employees.

Most normally do hand over a proportion, but only after they have deducted a variety of administration charges to cover their own costs, including credit card and banking charges, payroll processing costs, and the average costs of credit card fraud.

In some cases, service charges have been withheld from staff who drop or smash crockery, to cover the replacement costs, or to meet the bill where dishonest customers "do a runner".

The British Hospitality Association has drawn up a code requiring restaurants to clearly spell out on the menu how the service charge is allocated, but unfortunately it does not yet have universal support.

Until it does, you should never pay a service charge without satisfying yourself about where the money is going. Always ask who gets it and precisely how it is divided. Most premises should be happy to divulge this information.

If you wish to make sure the individual who served you benefits from your tip, the best solution remains to leave a cash tip on the table, remembering as you do so that the waiter has to declare it to HM Revenue & Customs, and pay tax and National Insurance on it. The average income for a waiter is 15,000 annually so the tips are important.

At the hairdressers, in contrast, tipping is dying out, according to Eileen Lawson, secretary general of the National Hairdressers Federation, particularly at the professional end of the business.

She said: "Tipping is not expected, although it used to be common, particularly at smaller, local hairdressers, but the practice is dying out. If you are paying a respectable price for a professional service then you are not expected to tip as well.

"Many of the chains and bigger salons now charge prices which reflect a superior modern service, so the expectation that clients will pay a tip as well has diminished.

"But hairdressing has always had a proud tradition of being a one-to-one relationship between the hairdresser and the client so it is entirely down to you if you still want to tip to reflect exceptional service."

When reflecting on whether to tip or not, it is worth remembering that hairdressing still employs a large number of staff who are earning the minimum wage.

Lawson says: "The apprentices will be on minimum wage while they are earning. Although they may be able to top this up a bit through profit-sharing bonuses, relating to the customers they serve and commission for product sales, their earnings will be modest. There are other perks to the job, not least getting their hair done, and the prospect of higher wages when they qualify. "Once a junior becomes a stylist then they can expect to earn 15,000 to 20,000 basic, but their earnings can be significantly boosted by building up a regular book of clients, which are of value to the business, as well as commission sales."

For this reason, Lawson suggests that if you do want to tip then you should tip the junior rather than the stylist, but she also suggests a modest amount.

"Hairdressers have never expected a standard 10 per cent, like restaurants. It should just be a small token."

Tipping is still often the custom at smaller, local hairdressers where the fees are cheaper. If you are paying less then the staff will be earning less so the extra will be welcome.

Lawson concludes: "With hairdressers, tips are always paid in cash to the individual. There is no question of the business taking the money as can happen elsewhere."

The same applies to cabs, where there are few hard and fast rules, although a tip is by no means obligatory, according to William McIntosh, general secretary of the Scottish Taxi Federation.

"A tip for a driver is a personal choice which will come down to the level of service. Certainly some drivers expect one, but there is absolutely no obligation on the customer. I am old fashioned and believe that it should only be paid to show your gratitude for service, such as help getting in and out. "

When in Rome… how much should you leave?

Tipping abroad is a minefield because countries take a very different approach, as Association of British Travel Agent spokesman warns: "Not knowing the procedure can get you into big trouble. In the States, it's 10 per cent everywhere, but you must never tip in Japan as it would cause enormous offence."

FRANCE

In the old days impoverished garons were only paid in tips, so the "pourboire", as they call it, was vital.

Today bars and restaurants are required by law to include service, but it is still customary to round up your bill. The amount varies – from ?0.15 for a beer to ?1.50 to ?2.30 after a meal. In Paris, or expensive restaurants, a 5 per cent tip on the table is also usual.

In the regions, tipping is far less common, and not expected in Corsica.

TURKEY

Tipping is customary but modest in Turkish restaurants and bars. In small restaurants 5 per cent is the guide. More expensive and you should leave 10 to 15 per cent. Do not leave coins as paper money is preferred.

SPAIN

The Spanish are fairly relaxed about tipping, although it is usual to leave 5 to 10 per cent on the table after a meal. Spanish families nearly always tip as a matter of courtesy.

ITALY

Don't tip in Italy! Not only is service normally included but most places in addition charge a coperto, or cover charge, of one to three euros per person. You may also be charged extra for bread.

GREECE

Tricky. The standard service charge in Greek restaurants and bars is now 16 per cent. To check, ask for a bill, which may not be forthcoming, and study the menu.

That aside, waiting staff are paid a pittance and rely upon tips for a living wage, so failing to leave a few euros in notes would be miserly.

PORTUGAL

Tipping is widely expected in Portuguese dining establishments. Waiters are poorly paid and work very long hours in season, often relying on benefits for the rest of the year. A 10 per cent minimum tip is normal, although in less touristy areas tipping is less common and may not even be understood.

GERMANY

Despite the 15 per cent for service, you are expected to round up the bill to the nearest whole figure; adding an additional 3 per cent to 5 per cent.

THE NETHERLANDS

Legally a service charge for restaurants must be included in the bill. Beyond this tipping is not obligatory, but if you still want to, leave around 10 per cent.

USA

A standard 15 to 20 per cent tip is standard in US restaurants. Some restaurants automatically include a 15 per cent service charge in the "check". You may still exclude it.

In many US states, servers are paid below the minimum wage and are expected to make up the difference in tips. On slow nights they may barely break even.

AUSTRALIA AND NEW ZEALAND

As a classless society, tipping used to be frowned on Down Under, where hospitality wages aren't bad. However, it is beginning to creep in in tourist spots.

JAPAN

Leaving money behind after a meal is regarded as an insult, so never do it.

THAILAND

There is no tradition, other than rounding up the bill. But it is not unknown in tourist locations.

CHINA

Tread carefully. Tourists are charged more than the Chinese, and older Chinese may consider tipping an insult. But tipping a few loose coins is becoming more common among younger people.

CANADA

Canada has a widespread tipping culture, with lowly-paid waiting staff relying on tips to make ends meet. Service charges are rarely included.