Gratuity vs Service Charge: What Wedding Couples Need to Know
This distinction trips up more couples than almost anything else in wedding planning. One goes to the workers. One might not. Here's how to tell the difference.
Last verified: January 2026
The crucial difference:
Gratuity goes directly to the service staff who worked your event. Service charges legally belong to the company and may never reach the actual workers.
Why this matters for your wedding
When you see "20% gratuity" on your catering contract, you assume the servers will get that money. Usually they do. But when it says "20% service charge," that money might go to the venue's general operating costs. The servers could see none of it.
This isn't shady, it's just how the industry works. Service charges cover things like administrative costs, equipment, and management overhead. They're not meant as tips. But couples often don't realize this until after the wedding when they hear the staff didn't receive anything extra.
How to identify which is in your contract
Read your contracts carefully. Look for these exact terms:
| Term Used | Who Gets It | Do You Need to Tip Extra? |
|---|---|---|
| Gratuity | Service staff directly | No, you're covered |
| Tip | Service staff directly | No, you're covered |
| Service Charge | Company (may or may not reach staff) | Yes, tip staff separately |
| Administrative Fee | Company only | Yes, tip staff separately |
| House Fee | Company only | Yes, tip staff separately |
The script for asking your vendor
Don't feel awkward about asking. Here's exactly what to say:
"I noticed there's a 20% charge on the contract. Can you tell me if that goes directly to the servers who will work my event, or if it goes to the company?"
Good vendors will answer clearly. If they're vague or defensive, consider that a warning sign about the company overall.
What to do if your contract has a service charge
If your contract includes a service charge instead of gratuity, plan to tip the individual workers separately. Here's how:
- Catering staff: $20 to $50 per server, given to the banquet captain to distribute
- Bartenders: $50 to $100 each
- Delivery personnel: $10 to $20 per person upon delivery
Yes, this means you're paying twice in a sense. But the workers who serve you directly deserve to benefit from your appreciation, not just the company.
Red flags in vendor contracts
Watch out for these warning signs:
- Vague language: "Fees may include compensation for service staff" is intentionally unclear
- Multiple charges: A service charge AND a separate administrative fee on top
- High percentages: Anything over 25% combined fees warrants questions
- No breakdown: Refusing to explain where each fee goes
Always ask for clarification before signing. A good vendor will explain their fee structure without hesitation.
The bottom line
Read "gratuity" and you can relax, the staff will get tipped. Read "service charge" and budget for separate tips to the workers. When in doubt, ask directly and tip the people who actually serve you.
Calculate your total tip budget
Once you know what's covered (and what isn't), use our calculator to figure out your total tip needs.
Open CalculatorFrequently Asked Questions
Can I ask my vendor about the service charge?
Absolutely. Ask directly: "Does the gratuity go to the staff who work my event?" Any reputable vendor will answer honestly. If they're evasive, that's a red flag.
What if my contract has both gratuity and service charge?
This happens sometimes. The gratuity goes to staff, the service charge covers administrative costs. You only need to tip extra if you want to. But check that the gratuity percentage is reasonable, like 18% to 22%.
Should I tip cash even if gratuity is included?
Only if someone was exceptional. A $20 bill to a server who really took care of you is a nice gesture. But it's not expected when gratuity is already in the contract.
Last updated: January 2026