We went out for dinner Friday night, and hubby's fish was swimming in grease, which surprised us because it was supposed to be baked. He was able to eat his starter, the baked potato that came with his fish, the unlimited rolls and his dessert, but the manager took his meal off the bill because of the fish. I thought that was quite kind of her, considering he was able to eat the rest. A percentage off would have been a kind gesture.
I still tipped the waitress for her amazing service. She had a knack for coming at the right times, just often enough, never when our mouths were full, very friendly and fun.
An owner keeping the tips to use as part of the salary is just cheap and crappy, even if it is allowed by law. I would think it would discourage people from trying harder to keep people happy, if they aren't going to get the extra for a job well done.