Service Charge At Restaurants Made Optional By Government. Now What?

New service charge rules mean you might not need to pay for shoddy service. But what does it really mean?

LF Team

Consumer Affairs and Food and Public Distribution minister Ram Vilas Paswan sent out a tweet saying that service charge levied by restaurants is optional payment to be made by consumers and they can decide whether to pay the same or not.

Restaruants are billing service charges in addition to taxes. Service charge is optional . Consumer has a discretion to pay or not.

— Ram Vilas Paswan (@irvpaswan) January 2, 2017

Service charge is generally levied in lieu of tips at restaurants and is part of the final bill at many outlets. The charge is added regardless of the level of service provided. At first glance, the service charge appears arbitrary as well, with different restaurants levying between five to 20 percent of the amount as service charge. The Department of Consumer Affairs has acted on complaints received from disgruntled customers, an official has said while issuing a statement saying that customers dissatisfied with service at any hotel or restaurant can opt for the service charge not being levied, as this is optional or discretionary.

On the other hand, Riyaaz Amlani, the President of National Restaurant Association of India (NRAI) said that the decision will affect will affect 8.5 million employees in the restaurant business.

"If this kind of statement is made without application of mind it will be extremely detrimental to the employees. It is not just the owner but all the employees who are associated with a restaurant including the dishwasher, the caretaker, the toilet cleaner, all depend on service charge. How can you take away their livelihood without application," Amlani told a news agency.

Meanwhile, the department has asked the state governments to advise hotels and restaurants to disseminate information, such as through displays, that “the service charges are discretionary or voluntary” and to sensitise the companies, hotels and restaurants regarding this notification.

It is prudent to say that waiters and other workers at restaurants will lobby for higher wages if the notification to make service charge optional comes through. This, in turn, will make restaurant owners hike the price of their menus. The industry, though, seems on a wait-and-watch mode currently.

Most restaurant owners that Living Foodz tried to connect to refused to give a statement saying they needed more time to understand the matter. Suffice to say, this isn’t the last you’ll be hearing about this story.



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