Tip out calculator: how to work out tip-outs (with examples)

A tip out calculator only needs one formula: tip-out = base × rate. The base is either your sales or your tips, depending on house policy, and the rate is the percentage each role gets. Subtract all your tip-outs from your tips to get what you keep. For a pool split by hours, your share = pool × your hours ÷ total hours.

The longer answer

There are usually two ways to work out a tip-out. A percent of sales tip-out is based on what you rang in, so the bar might get 1% of your sales whether your guests tipped well or not. A percent of tips tip-out is based on what you actually made, so it shrinks on a bad tip night.

Pools work differently. Everyone's tips go in one pot, sometimes with a set amount taken off the top for the bar or kitchen first. The rest is shared out by hours, by points for each role, or equally.

Your manager or your written policy decides which method applies, and the rate. There's no single standard rate, so ask for yours in writing if you don't have it.

The law sets limits on who can be in a pool. In the US, the Department of Labor's Fact Sheet #15 says employers can require tip pooling but can't keep any part of employees' tips, and managers and supervisors can't take tips from the pool. Canada and the UK have their own rules, covered further down.

The tip-out formula

For each person you tip out:

• Sales-based: tip-out = your sales × their percentage
• Tips-based: tip-out = your tips × their percentage

Then: what you keep = your tips − all your tip-outs added together.

Check which sales count. Some houses use total sales, some leave out tax, and bar tip-outs are sometimes based on alcohol sales only. Your checkout report may show the right number. If not, ask your manager which figure to use.

Example: the same shift, both ways

Say you rang in $1,600 in sales and made $240 in tips. You tip out the busser and the bar.

With these rates, the two come out the same on this shift. Now say the same $1,600 in sales only brought in $160 in tips.

• Sales-based: still $48 out, so you keep $112. That's 30% of your tips gone.
• Tips-based: $24 + $8 = $32 out, so you keep $128.

That's why sales-based tip-outs sting on slow tip nights. With a sales-based tip-out, the support staff get the same whatever your guests tip. You carry the risk.

Sales-based tip-out lookup table

Find your sales on the left and the tip-out rate along the top. For other amounts, multiply: $1,800 at 2% is $1,800 × 0.02 = $36.

Phone shortcut: move the decimal point two places left to get 1%, then multiply. $1,840 in sales is $18.40 at 1%, so $36.80 at 2%.

Splitting a tip pool

By hours

Divide the pool by everyone's total hours to get a rate per hour, then multiply by each person's hours.

Example: a $600 pool. Alex worked 6 hours, Sam 5 and Jo 4, so 15 hours in total. $600 ÷ 15 = $40 an hour. Alex gets $240, Sam $200, Jo $160.

By points, with a tip-out off the top

Each role gets a number of points per hour, so a server might count as 1 point an hour and a busser as 0.5. Any fixed tip-out comes off the top first.

1. Take the tip-out off the top: a $600 pool minus $60 for the bar leaves $540.
2. Work out points: Alex (server, 6 hours) has 6, Sam (server, 5 hours) has 5, Jo (busser, 4 hours at 0.5) has 2. That's 13 points.
3. Value of one point: $540 ÷ 13 = $41.54.
4. Shares: Alex about $249.23, Sam about $207.69, Jo about $83.08.

Round to the cent at the end, not at each step, or the shares won't add back up to the pool.

Equally

Pool ÷ number of people. Simple, and it works when everyone works the same shift length.

Is your tip-out allowed?

The math is yours to check. Who's allowed in the pool depends on where you work.

United States

Per the DOL's Fact Sheet #15:

• If your employer takes a tip credit (pays you less than minimum wage in cash because of your tips), the pool can only include jobs that customarily and regularly get tips.
• Cooks and dishwashers can share in the pool only if your employer doesn't take a tip credit and everyone gets a cash wage of at least the federal minimum wage.
• Managers and supervisors can't get tips from the pool. Your employer can't keep any part of your tips.
• For card tips, your employer can take off the card company's fee percentage, but no more than that. Some states don't allow even that.

Canada (Ontario)

Rules are set by each province. In Ontario, the Employment Standards Act guide says your employer can make a tip pool a condition of the job and redistribute it to some or all employees.

Managers can generally share in it if the employer's policy allows. Apart from a tip pool, deductions required by law and court orders, your employer can't hold back or deduct from your tips. If you work in another province, check its employment standards office.

United Kingdom

Under GOV.UK's tips at work rules, all tips must go to workers without deductions. The statutory code of practice says employers should share tips using clear, objective factors, such as type of role, hours worked or seniority, and, where tips are paid more than occasionally, have a written tipping policy in plain language.

You can make a written request, once every three months, for the total tips received and the amount allocated to you, going back up to three years if you worked there for that whole period.

The code doesn't cover a cash tip you keep with no involvement from your employer.

Write your tip-outs down

Whatever the method, write down what you tipped out and to whom each shift. If your house's math is off, that's how you'll spot it.

In the US, IRS Publication 531 says your daily tip record should include tips you paid out to other employees through pools or tip splitting, plus their names. When you report tips to your employer, you report only the tips you received and kept, not the part you passed on. Tips you get from coworkers do count as yours.

Splitting tips in Tipling

Full disclosure: Tipling is our app.

Its Split tips screen does the pool math above. Enter the pool and the team's hours to split by hours, or split equally, both free. With Pro you can split by role points and take tip-outs to the bar or kitchen off the top first. Then send the split to the team, and start a shift log with your share already filled in.

Each shift also has its own tip-out and tip-in fields next to your cash and card tips and hours, so your record shows what you made and what you passed on. With Pro you can say the shift out loud instead of typing (English only) and check what it filled in.

Tipling doesn't connect to your POS, so sales, the pool and hours are numbers you type in. It also can't tell you whether your house's tip-out policy follows the law. See the Tipling home page for the whole app.

FAQ

How do I calculate a tip out?

Multiply the base by the rate. If the bar gets 1% of sales and you sold $1,500, that's $15. If the busser gets 15% of tips and you made $200, that's $30. Add up every tip-out and subtract it from your tips to get what you keep.

Is a tip out based on sales or tips?

It depends on your restaurant. Sales-based tip-outs stay the same even when guests tip badly, so they take a bigger share of a weak night. Tips-based tip-outs rise and fall with what you actually made. Ask your manager which one applies.

What's a normal tip out percentage?

There's no official standard rate. It's set by each restaurant's policy and changes by role. If nobody has told you yours, ask for it in writing so you can check your own math.

Can my manager take part of the tip pool?

In the US, the Department of Labor's Fact Sheet #15 says managers and supervisors can't receive tips from the pool, though they can keep tips customers give them directly for service they provided directly and solely themselves. Ontario's rules are different, and managers can generally share in a pool if the employer's policy allows.

Do I report the tips I tip out?

In the US, IRS Publication 531 says you report to your employer only the tips you received and kept, not the part you passed on to coworkers. Keep a record of what you paid out and to whom.