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This comes from a custom of inviting a servant to drink a glass in honour of the guest, and paying for it, in order for the guests to show generosity among each other. A 2009 academic paper by Steven Holland calls tipping "an effective mechanism for risk sharing and welfare improvement" which reduces the risk faced by a service customer, because the customer can decide whether or not to tip.

In some cases, "[c]ompensation agreements [can] increase worker effort [...] if compensation is [...] tied to the firm's success" and one example of such a compensation agreement is waiters and waitresses who are paid tips.

A tronc is an arrangement for the pooling and distribution to employees of tips, gratuities and/or service charges in the hotel and catering trade.

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In June 2008, the Employment Appeals Tribunal ruled in a UK test case (Revenue and Customs Commissioners v Annabel’s (Berkeley Square) Ltd) that income from a tronc cannot be counted when assessing whether a wage or salary meets the national minimum wage.

In Nigeria tipping is not so common at upscale hotels and restaurants because a service charge is usually included in the bill, though the employees seldom get this as part of their wages.

An example would be tour guides and associated drivers.

In Hong Kong, China, tipping is not typically expected at hotels or restaurant establishments, where a "service charge" of 10% is added to a bill instead of expecting a gratuity.

If small bills are handy In Indonesia tipping is common in large tourist areas, such as Bali and Lombok.

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