- The Reality of Tipping in the Dominican Republic
On October 10, 2024, a bill was put before the Dominican Senate aimed at reforming our Labor Code by modifying several aspects of great relevance for Dominican workers. I would like to share my thoughts on the proposed changes to legal tipping with you.
Currently, the Labor Code provides that this legal tip must be distributed among “the workers who have provided service.” However, the bill wants to modify Article 228 of the Labor Code by establishing that all tips must be distributed among “all workers of the establishment, with the exception of those belonging to the managerial and administrative area.”
Two issues arise with this modification which I consider important to reflect on, namely a) keeping the figure of the legal tip; and b) the insufficiency of the text proposed in the bill.
In many European countries such as Spain [1] Portugal [2] and Italy [3] to name a few, there is no legal obligation to leave a tip. Although Costa Rica and Brazil, as well as the Dominican Republic, have regulations on tipping, in most Latin American countries tipping is not imposed by law, but it is customary [4], as is the case in Chile [5], Colombia [6], Argentina [7], Panama [8] and Mexico, among others.[9]
I would like to highlight the case of Mexico as our country’s main competitor in the tourism sector, a country where not only is tipping not legally mandatory, but where the Federal Consumer Protection Office advised consumers about their rights in an article (press release) in February 2020. This bulletin made clear that “restaurants cannot demand a tip, this is a voluntary gratuity and cannot be included in the bill without the consent of the consumer.” It is curious, to say the least, how two countries competing side by side in the tourism sector can have such opposing positions on tipping, an aspect that undoubtedly affects the customer competitively.
The Royal Spanish Academy (RAE) defines tipping as a “small gratuity with which an occasional service is rewarded”. So how can one expect a gratification or reward to be mandatory when even its synonyms are words such as “voluntary” or “plus”, according to the RAE. Unfortunately, in our country there are many places where the service provided leaves much to be desired, and of course, what reason do they have to provide a good service if a 10% tip is charged, regardless?
Furthermore, waiters and other people who provide direct service to the customer expect a “tip” in cash, in addition to the 10% that is already charged to customers.
In relation to my second concern, by virtue of the proposed modification, some employees who have no contact with customers or who were not even working on the day it was charged will receive tips. The proposed text also establishes that the distribution must be made factoring in (1) “level of qualification”, (2) “the greater or lesser impact of the work on direct customer service” and (3) “the service area where the tip originates”, among others. This is a perfect example of a paragraph that says a lot and says nothing. The bill completely ignores the issue and fails to establish exactly how the percentage distribution of the tip should be.
The solution? Let the workers resolve it with their employers, or at least so it seems, since the proposal says that, as long as there is mutual agreement between employer and employee(s), the proportional distribution can vary in any given establishment. However, how do they intend to implement this in practice? Should all workers agree? At least fifty percent (50%)? Well, the first scenario is utopian and unrealistic and the second opens the possibility that groups making up the majority of staff can “agree” on an unfair distribution to the detriment of other jobs in these establishments.
If the final decision is to keep the figure of the legal tip, our Labor Code should at least establish minimum percentage values according to the type of work that the employee performs, some kind of control over these distributions, in order to guarantee that it is fair for all workers.
But, above all, we must reflect on whether this “legal tip” is really a gratification and a sign of appreciation for attentive and high-quality service, since it is more like a kind of subsidy paid by customers to the salary of workers in this type of business.
*Author: Daniel Zavala, Associate Attorney – DMK Abogados
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