What is Gratuity?

Legal Definition
A gratuity (also called a tip) is a sum of money customarily given by a client or customer to a service worker, in addition to the basic price. Tipping is commonly given to certain service sector workers for a service performed or anticipated. Depending on the country or location, it may be customary to tip servers in bars and restaurants, taxi drivers, hair stylists, and so on.

Tips and their amount are a matter of social custom and etiquette, and the custom varies between countries and settings. In some locations tipping is discouraged and considered insulting; while in some other locations tipping is expected from customers. The customary amount of a tip can be a specific range of monetary amounts or a certain percentage of the bill based on the perceived quality of the service given.

In some circumstances, such as with U.S. government workers and more widely with police officers, receiving gratuities (or even offering them) is illegal: they may be regarded as bribery. A fixed percentage service charge is sometimes added to bills in restaurants and similar establishments. Tipping may not be expected when a fee is explicitly charged for the service.

From a theoretical economic point of view, gratuities may solve the principal-agent problem, (the situation in which an agent, such as a server, is working for a principal, such as a restaurant owner or manager). Many managers believe that tips provide incentive for greater worker effort. However, studies of the real world practice show that tipping is often discriminatory or arbitrary: workers receive different levels of gratuity based on factors such as age, sex, race, hair color and even breast size, and the size of the gratuity is found to be only very weakly related to the quality of service.
-- Wikipedia
Legal Definition
A present; a reward without legal consideration.
-- Ballentine's Law Dictionary