Restaurants often do not pass on service charge to staff

Service charge, collected by restaurants is meant for the benefit of employees. However, several restaurants often do not pass on the service charge they collect from their customers to their staff, experts and waiters told The Sunday Guardian. Service charge has been declared optional by the government, which left it to the customers to decide whether, or not, they would pay the charge depending on the quality of service provided. To this the National Restaurant Association of India has said that customers should stop visiting restaurants if they did not want to pay the service charge. In fact, many restaurants in Hauz Khas and the Khan Market area in New Delhi have even put up notices stating that it is mandatory to pay service charge.

While certain incentives are given to waiters in addition to their salaries, this has nothing to do with the amount collected by the restaurateurs in the form of service charge. Many waiters have lodged anonymous complaints with consumer forums about being exploited and not being given any share of the amount collected. “We have received several complaints from waiters where they have accused the management of not distributing the amount collected through the bills transparently. This trend is across the country. This is why we represented to the government to abolish the culture of service charge reflected on bills and make it discretionary and voluntary,” Bejon Kumar Misra, founder of Consumer Online Foundation, told The Sunday Guardian.

In July 2015, the Union Ministry of Finance had noted that service charge, which ranges anywhere from 5% to 20%, had absolutely nothing to do with service tax. It is not a government levy, does not go to the government, and can be denied by the diner if he/ she is not satisfied with the service. “Service charge is used for staff welfare activities such as exigencies, emergencies, staff grooming, breakages, shortages, and if there are any leakages, that get paid for from there,” said Riyaaz Amlani, President, National Restaurant Association of India ( NRAI), and Chief Executive Officer and Managing Director, Impresario Entertainment & Hospitality Pvt. Ltd. According to experts, the thumb rule says that 70% of the collected amount should be directly distributed, while the remaining 30% must be used for staff welfare services. However, this rule is invariably flouted by restaurateurs to get their profit chart ticking. As a result, unaware diners end up shelling an unreasonable amount despite being unhappy with the services.

Talking to this newspaper under the condition of anonymity, a waiter at a prominent cafe in Khan Market in central Delhi said, “We never get any share of the service charge. At the end of the month, we are handed