Often referred to as a tip, this is a sum paid without obligation for services rendered. It is normally taxable in the hands of the recipient. In some industries, e.g. cab driving, catering or hairdressing, gratuities are an important source of income and basic salaries may be adjusted accordingly. The term is often used for lump-sum payments on the termination of employment, misleadingly in the case of the Armed Forces where such payments are actually contraded for. In the hotel industry, a charge may be added to the bill, supposedly in lieu of gratuities. This is known as a service charge, and is divided amongst the hotel staff much as prize money was divided in the romantic days of British naval supremacy.
Reference: The Penguin Business Dictionary, 3rd edt.
Invezz is a place where people can find reliable, unbiased information about finance, trading, and investing – but we do not offer financial advice and users should always carry out their own research. The assets covered on this website, including stocks, cryptocurrencies, and commodities can be highly volatile and new investors often lose money. Success in the financial markets is not guaranteed, and users should never invest more than they can afford to lose. You should consider your own personal circumstances and take the time to explore all your options before making any investment. Read our risk disclaimer >