Do You Tip Your Servers?

Dear Reader,

Tipping has a long and messy history, and much of it has nothing to do with gratitude.

In India, people gave small gratuities or baksheesh for centuries. When the British arrived, they turned this casual practice into something more formal. Anthropologist Sayan Dey told me that the British would use tips to reward people who shared information (or a ‘tip’) that helped the colonial administration.

In the United States, the story became even more troubling. After enslaved Black people gained freedom, employers refused to pay them proper wages. They expected them to survive on tips instead. That legacy still shapes the American service industry, where many workers earn a sub-minimum wage and depend on consumers to make up the difference.

India ended up with a different model. For years, restaurants would add a service charge of about 10-15%; they said this fee motivated staff and covered common losses inside the restaurant. Then, in 2022, the Central Consumer Protection Authority made it illegal to levy a mandatory service charge. Some places stopped adding it. Others still add it but will take it off the bill if you ask.

And many people do ask.

“If I want to tip someone, I will tip him directly,” Anant, who works at his family’s business, said. “Why should I pay a service charge when I know it will not reach the staff?” 

While tipping does reach servers directly, for some diners and servers, the process can feel awkward, as I learned while reporting this story. Service charge, on the other hand, tries to create a more formal incentive.

But what actually happens to the service charge?

Some workers said they split both tip money and service charge among themselves. Others said they are not sure they ever see the service charge at all. In fact, India does not have a clear law that explains what service charge is or how restaurants should use it, according to Karun Mehta, a lawyer who specialises in consumer affairs.

So what should you do the next time you go out to eat?

In this week’s episode of The Signal Brief, I speak to diners, workers and lawyers to understand what tipping and service charge really mean for the people on both sides of the table.

Find us on Youtube, Spotify and Apple Podcasts.

If you have any feedback, do write to us at [email protected], or reach me directly on Instagram or Twitter at @thesignaldotco, or via email at [email protected].

Thanks for listening, and have a rejuvenating weekend.

Best,
Kudrat
on behalf of The Core

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