Understanding Gratuity vs. Tip: How Do They Differ in Service Settings?

What is the difference between a gratuity and a tip?

A gratuity and a tip are often used interchangeably to refer to an amount of money given voluntarily to show appreciation for a service provided. However, there is a subtle difference between the two terms.

A gratuity is typically a sum of money that is added to a bill automatically, especially in the context of a restaurant or hotel service charge. On the other hand, a tip is usually an amount of money given directly by the customer to the service provider as a token of appreciation for good service.

In summary, while both a gratuity and a tip involve giving money as a gesture of thanks, a gratuity is more commonly a predetermined or automatic charge, whereas a tip is a discretionary amount given directly to the service provider.

Dear Neelima, if you refer to the dictionary, you will find that the meaning of "gratuity" and "tip" is the same. The word gratuity has two meanings, viz.:

a) A tip given to a waiter, taxi driver, etc. The synonyms of this word are tip, gift, present, donation, reward, handout, recompense, boon, etc.

b) A sum of money paid to an employee at the end of a period of employment.

Explanation for the meaning (b): Payment of gratuity is a statutory requirement under the provisions of the Payment of Gratuity Act, 1972. Employers must comply with the provisions of this act. Please note that this payment is made by the employer and not by the customer.

On checking the internet, I found the following article. It may be of interest to you: https://www.inhouserecipes.com/gratuity-usa/

Thanks,
Dinesh Divekar