How to Distribute Employee Tips


Some jobs come with the benefit of being able to receive tips from satisfied customers. Restaurant employees commonly receive tips, as do hairdressers, auto repair technicians and cab drivers. As an employer, it can sometimes fall to you to decide how to fairly distribute tips among your employees.

  • Distribute tips at the end of the day to each employee if your place of business uses a tip jar. Add the amount of money in the jar and divide it by the number of hours the store conducted business that day. Then, divide that by the number of employees, making sure everyone is paid according to the number of hours he worked.

  • Discuss with your employees the importance of putting all tips into the tip jar, even those that received directly. This ensures that everyone receives a fair percentage of the tips at the end of the work day.

  • Decide if someone gets a higher percentage of tips than others. Often, different positions require different amounts of work. For example, a bartender may expect to get a larger percentage of the tips from the tip jar than a bar back because he is mixing drinks, conversing with customers and calculating bar tabs while the bar back is restocking drinks and cleaning the bar area but not dealing directly with customers. Hold an employee meeting and decide together what a fair percentage is for each position. It's important to listen to the employees' input, but remember, as the employer, you make the final call as to who gets what percentage.

  • Designate a percentage of the tips to the Front of House staff, or FOH. At restaurants, this means the greeters and hosts who seat the customers in waiters' sections. At other places of business, such as salons, this is the greeter and person in charge of answering the phones and scheduling appointments. The Front of House staff is an integral part of your business because they are the first people to greet customers when they walk in and are often in charge of distributing customers among the other employees. Unlike waiters or stylists, the FOH staff usually doesn't get tipped by customers, so it's important to designate a percentage of the tips to them to thank them for a job well done and to motivate them to keep the business running smoothly.

  • Don't include managers in the tip distribution if they are paid a salary. Generally, managers such as restaurant or salon managers don't receive a percentage of the tips because they are not paid hourly like the other employees.

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