A tip (also called a gratuity) is a payment made to certain service sector workers in addition to the advertised price of the transaction. The amount of a tip is typically calculated as a percentage of the transaction value before applicable taxes. Such payments and their size are a matter of social custom. Tipping varies among cultures and by service industry. Though by definition a tip is never legally required, and its amount is at the discretion of the person being served, in some circumstances failing to give an adequate tip when one is expected may be considered very miserly, a violation of etiquette, or unethical. In some other cultures or situations, giving a tip is not expected and offering one would be considered condescending or demeaning.

In Japan, for example, tipping is considered an insult both to the owner of the establishment and to the server. In some circumstances (such as tipping government workers), tipping is illegal.The word “tip” is often inaccurately claimed to be an acronym for terms such as “to insure prompt service”, “to insure proper service”, “to improve performance”, and “to insure promptness”. However, this etymology contradicts the Oxford English Dictionary[4] and is probably an example of a backronym. Moreover, most of these backronyms incorrectly require the word “insure” instead of the correct “ensure”.Some claim the origin for this term is a concept from Judaism, in that it was a chiyuv (obligation) for a seller to “tip the scales” in favor of the customer. The Torah says, “Nosen lo girumov (Give to him a tip).” For example, if your customer has asked for three pounds of onions, you should measure out the three pounds plus one extra onion, tipping the scale in his favor.

In some jurisdictions, tipped workers qualify for a lower statutory minimum wage from the employer, and therefore may supplement deficient pay with tips. For example, the United States Internal Revenue Service (IRS) requires restaurant employers to ensure that the total tip income reported to them during any pay period is at least eight percent of their total receipts for that period. If the reported total is below eight percent, employers must allocate as income the difference between the actual tip income reported and eight percent of gross receipts. Therefore the IRS is implicitly assuming the average tip to be eight percent.Legally, tips should be reported as income for tax purposes by the recipient.A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade. The person who distributes monies from the tronc is known as the troncmaster. When a tronc exists in the UK, responsibility for operating PAYE on the distribution may lie with the troncmaster rather than the employer. (The word ‘tronc’ has its origins in the French for collecting box.)

Some establishments pool tips and divide them to include employees who lack customer contact. At some restaurants, agreements among the staff require the servers to tip out members of the support staff (kitchen, bartender, and busser) at the end of their shift;this means that servers pay a certain fixed percentage of their sales (most often a portion less than 15 percent of total sales) to the other staff. Thus when a patron leaves a small tip, it results in the server having to receive less from the tipping pool than other staff.

Tipping is not expected when a fee is explicitly charged for the service. For example, a service charge for all patrons that is automatically added to the tab with no tipping the rule in Brazil. Bribery and corruption are sometimes disguised as tipping. In some places, police officers and other civil servants openly solicit tips, gifts and dubious fees using a variety of local euphemisms. For example, a traffic policeman in Mexico might ask a commuter to buy him a “re fresco” (soft drink), while a Nigerian officer might expect “a little something for the weekend.

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