In times of digital payment transactions, restaurateurs should question how they handle tips.
Illustration Simon Tanner / NZZ
When it comes to tips, restaurateurs in Switzerland benefit from a kind of freedom from fools. The tips that go to employees in the form of coins and notes are usually not declared anywhere. It does not appear on receipts or on a wage statement, but instead ends up as cash in the pockets of the waitresses and waiters. And so, in most cases, tips become black money.
For many decades, this informal interaction was tolerated and one might even say encouraged. From workers who were grateful for the infusion of cash and from authorities who didn’t want to see any settlements.
From a legal point of view, the restaurateurs were evading taxes. Because the law says clearly: As soon as tips make up more than 10 percent of gross income, they count as wages. They then become subject to tax and social security contributions. But in times of cash, no one could prove when this limit was exceeded.
That’s different today. Cash is disappearing and card payments are taking its place. Tips are also increasingly being paid digitally. This changes the situation fundamentally, tips suddenly appear in the accounting of restaurants and cafés. “What now?” the restaurateurs ask themselves. Looking the other way, as was common practice for a long time, is no longer possible. And so there is actually only one solution: Companies have to start taking responsibility for their employees’ tips.
Tipping follows a norm
You can see it differently. For Casimir Platzer, President of the Gastrosuisse Association, a tip is a gift from the guest, a voluntary donation, so to speak, that goes beyond the actual price for a service. “Tips are not part of the wages because they usually do not come from the employer,” he says. This is understandable as tips in Switzerland have had to be included in the price since 1974. What we call a tip today is the so-called “overtip”.
But the “overtip” has long since become more than just rounding up to the next franc amount. Today, tipping follows a social norm. Anyone who doesn’t tip after a visit to a restaurant is considered stingy. At the same time, cafés and even takeaways are increasingly asking people to tip directly, for example by depositing fixed percentages on card machines. In Switzerland, more than a billion francs in tips flow every year – and that’s in the catering industry alone. They have long been a normal part of wages and should be taxed as such.
The employees benefited from this in the longer term: firstly, they would receive more pensions in old age, secondly, they would be better insured in the event of illness or unemployment, and thirdly, they would have a higher credit rating, which can be an advantage when looking for an apartment, for example.
Higher basic wage, more satisfaction?
Some restaurateurs see it differently. They fear that employees will move to better-paying jobs if they are no longer allowed to simply put tips in their pockets. But that is a difficult argument. Untaxed money should not be used as a reason for a person to want to get a job in the first place. In this way, restaurateurs are shifting responsibility for a decent wage away from themselves.
You could also look at it this way: declaring tips would increase the employees’ basic wages. Companies would incur additional costs through wage contributions, but they could accept that as a sign of appreciation for an industry that is known for its chronically low salaries.
At the same time, the restaurateurs signaled that they want to adapt to today’s times. Because this much is certain: digitalization is making progress. More and more people are paying more and more tips with the card. Accounting provides evidence.