In short:
Hospitality staff say they are concerned they are receiving fewer tips as the use of cash declines and the cost of living rises.
While EFTPOS tips are becoming more prevalent, some workers say employers are withholding those funds.
What’s next?
Experts recommend employers establish clear guidelines on how tips are distributed to avoid conflict with staff.
Former restaurant worker Arif Levitzke has worked in a number of hospitality jobs in Melbourne and says it can be difficult to earn a living on a casual wage.
He says the distribution of tips at the end of a long night often provides a helpful boost to supplement his wage, but ambiguity around EFTPOS tips has many confused.
“A [previous] employer, when we put our website up, had a $2.50 or $5 tip added automatically to all online orders, which is pretty significant considering how many orders we had come through,” he said.
“Over the course of two years it ended up being about $10,000, which we never saw.”
Mr Levitzke said as well as the online orders, he and his workmates never received any benefit from tips made on the restaurant’s EFTPOS machines, despite an expectation by customers they would.
“I feel like people feel it’s a bit forced, which is fair enough,” he said.
“We don’t live in a tipping culture, but when you’re a hospitality worker and you’re making like $25 an hour and the cost of living has gone up as it has, every little extra dollar counts.
“It’s so important … I was skipping meals multiple days a week, so having a little bit of extra money on the side [through tips] to pay for food and groceries meant that I could have a regular diet.
“If the employees know there’s money coming in that is intended for them and not being passed on, it creates a really hostile work environment.”
Mr Levitzke said while it varied from venue to venue, the ambiguity surrounding tips had also led him not to tip as a customer at all.
Rules unclear
Australia’s tipping culture, or lack thereof, is not legislated, according to the Fair Work Ombudsman.
“The Fair Work Act doesn’t have rules about dealing with tips,” a spokesperson said.
“Employees must be paid at least the minimum rates of pay under any applicable award or enterprise agreement, and there may be additional requirements about rates of pay or dealing with tips in an employee’s contract of employment.”
Cashless economies expert Dr Angel Zhong said there was very little recourse for staff who were not receiving EFTPOS or cash tips, with no mention of the practice in the latest Restaurant Industry Award.
“So it’s really up to the common practice of the industry and whether there is any agreement in the employment contract,” said Dr Zhong, an associate professor at RMIT University.
“We are moving towards a cashless society where these days only 13 per cent of consumer payments are made in cash, so with the cost-of-living crisis, I totally relate that [workers] are worried about tips not being distributed to them if payments are made by digital payment method.”
She said basic human psychology has contributed to a culture shift surrounding the practice.
“As human beings, we pay more attention to what is tangible … so when you get change after paying a bill, it is more likely for human beings to use that change, use the coins to pay, to give tips,” she said.
“To avoid disputes, it’s really crucial for employers to establish clear guidelines on how tips are collected, stored, and distributed.”
Federal Minister for Employment and Workplace Relations Murray Watt said Australian workers should not have to rely on tips to make ends meet.
“In my view, when customers choose to pay more for outstanding service provided by staff, that money should go directly to staff,” he said.
“The onus is on employers to do the right thing by their employees,” he said.
“The Albanese government is doing our bit to ensure workers, including hospitality workers, are being paid more. This includes a $200-per-week increase in full-time award workers’ earnings and a $143-per-week increase in the minimum wage.”
Silent economy
Data from point-of-sale provider Lightspeed also showed a gradual rise in the number of EFTPOS tips annually while the numbers of cash tips are difficult to track.
Lightspeed senior marketing director Simon Le Grand said the percentage of EFTPOS payments in Australia that include a tip were higher in 2024 than at any point since 2019.
“So far this year, 0.71 per cent of all transactions have been made with an accompanying tip; higher than 0.6 per cent in 2023, 0.53 per cent in 2022, and 0.45 per cent in 2019,” he said.
“This is based on millions of digital transactions — EFTPOS or QR code — across Australia in the past six years.”
A shifting landscape
Beechworth restaurant manager and hospitality veteran Naomi Ingleton said she remembered when tips were a big part of her income.
“It isn’t commonplace in Australia, so we don’t have a tipping culture,” she said.
“There are a lot of people who don’t tip, compared to when I was in hospitality in Melbourne in the 1990s, you basically survived off your tips, and your wage was just a supplement to that.”
She said her restaurant’s practice was fair to staff — each night all EFTPOS tips are taken out as cash and divvied up between staff, including back-of-house staff.
“I’ve had my own business for 15 years and it was always between all of the staff at the end of the shift. Everybody has a contribution to the diner’s experience, whether they’re washing the dishes or serving on the floor,” she said.
“It’s not the business’s money, that’s the staff’s money, and that’s the cherry on top for working hard and providing service.”
She said she wasn’t shocked to hear some businesses were not passing on EFTPOS tips to employees.
“It’s massive. It could be your grocery shopping for the week,” she said.
“I’ve been in hospitality for a long time and nothing shocks me. Would I work for those businesses? Probably not.”
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