Hospitality sector against ruling on service charge

CHENNAI: The Central Government’s new guidelines stipulating the levy of service charge by hotels and restaurants, as “unfair trade practice,” have evoked a strong protest from the hospitality sector, which termed the move “unnecessary interference” on extra income that is shared by employees.  The guidelines issued through the Union food and consumer affairs ministry, strictly prohibits levying service charge as part of the bill by hotels and restaurants from consumers and left it to the latter’s discretion. The column of service charge on a bill will be left blank for customers to fill up before making the final payment. Also, it is for the consumers to decide on whether or not to pay tip after the meal based on quality of service etc.

Though it remains to be seen if the guidelines would be implemented in letter and spirit,  the National Restaurant Association of India (NRAI), which opposed the move, contended that unless a legislation is enacted, restaurants would continue to levy Service Charge. Says Riyaaz Amlani, President, NRAI, “the present statements by the government is causing unnecessary confusion in public, which is adversely affecting the smooth functioning of restaurants. It is once again reiterated that as of now levy of service charge by restaurants is legal and does not violate the provisions of Consumer Protection Act, 1986, since the same is mentioned in the menu \ price list and informed to the customer.”

The levy of service charge directly benefits 6 million people employed in the industry and of them, over 60 % employees depend on service charge to augment upto 30 % of their income. All the organised food and beverage operators employ the service charge means for the benefit of employees including waiters, cooks and cleaners.