What Is a Gratuity?

What is a gratuity?

A gratuity is a sum of money given to a service worker as a reward for their service, over and above the cost of the goods or service itself. In everyday terms, a gratuity is a tip. The word is simply a more formal or official-sounding term for the same thing, often used on receipts, in policies, and in the hospitality industry. Gratuities are customary for workers like restaurant servers, bartenders, taxi drivers, hotel housekeeping, and tour guides, particularly in countries with a strong tipping culture such as the United States. The purpose is to acknowledge and reward good service, and in some industries and countries, tipped workers rely on gratuities as a significant part of their income.

What is the difference between a gratuity and a tip?

There is essentially no difference in meaning: a gratuity and a tip are the same thing, extra money given for service. The distinction is mostly one of tone and usage. Tip is the casual, everyday word most people use, while gratuity is the formal term you are more likely to see printed on a bill, a menu, or a company's policy, or used in professional and legal contexts. So when a restaurant check has a line labeled gratuity, it is referring to the tip. The one place the wording matters is with automatic gratuities, where the more formal term signals that a set tip has been added to your bill for you, which is worth checking so you do not tip twice.

What is an automatic gratuity?

An automatic gratuity is a tip that a business adds to your bill automatically, rather than leaving the amount up to you. It is most commonly applied to large groups at restaurants, often parties of six or more, where a set percentage, frequently 18 to 20 percent, is added to the check as a mandatory service charge. Some venues, cruises, resorts, and banquet or event services also apply automatic gratuities. The reason is to ensure servers are fairly compensated for the extra work of large tables or included services. The key thing for you is to read your bill: if an automatic gratuity has already been added, you do not need to leave an additional tip on top, unless you want to reward exceptional service.

How much gratuity should you leave?

When a gratuity is not automatically added, the amount follows normal tipping customs for the service and country. In the United States, that typically means around 15 to 20 percent of the pre-tax bill at restaurants for good service, a dollar or two per drink at a bar, roughly 15 percent for taxis, and a few dollars for hotel housekeeping or porters. In countries with a weaker tipping culture, gratuities are smaller or not expected, since service may be included. Always check whether a gratuity or service charge is already on the bill before adding more, to avoid double-tipping. The gratuity is meant to reflect the quality of service, so adjust within the customary range accordingly.