Restaurant owners are disappointed over government's clarification that service charge is optional, saying it would "adversely impact millions of workers".
"Levying service charge is an established practice of several years and it has even been upheld in the court of law. Most of money collected goes to the staff and is an integral part of their income. Discontinuation of the same at this stage will adversely impact millions of workers and therefore we plan to continue levying the service charge as before," Anurag Katriar, Executive Director and CEO at Mumbai's deGustibus Hospitality Pvt. Ltd told IANS.
The Department of Consumer Affairs on Monday issued a statement saying that customers dissatisfied with service at any hotel or restaurant can have the service charge waived. Many hotels and restaurants charged "service charge in the range of 5-20 per cent, in lieu of tips" and consumers were "forced to pay irrespective of the kind of service provided", the department said.
According to Riyaaz Amlani, President of the National Restaurant Association of India, the decision will affect around 8.5 million employees associated with the food service industry, including "everyone from the owner to the dishwasher, the caretaker, and the toilet cleaner."
"It is a matter of policy for a restaurant to decide if service charge is to be levied or not. Information regarding amount of service charge is to be clearly mentioned by restaurants on their menu cards or otherwise also displayed, so that customers are well aware of this charge before availing the services and can use their discretion of not using the facility offered by the restaurant," Amlani added.
Mitesh Rangras, Partner of Mumbai's SID hospitality said that removing service charge could affect staff morale.
"Earlier the tips used to go only to the service staff and there was a big gap between what the kitchen and service staff were making. Since service charge is distributed equally amongst all departments based on grades, it helps motivate everyone and improve team morale"," Mitesh Rangras, Partner of Mumbai's SID hospitality said.
To be sure, some restaurants support the move. Samira Chopra, Director of New Delhi's Cybiz BrightStar Restaurants, said, "Restaurants should focus on giving premium services to all their guest and let the customers decide if they want to pay for good service."
According to Shivam Bhaskar, owner of Number 31, restaurants will have to renegotiate staff salaries and "the whole industry would go into a tizzy."
The Department of Consumer Affairs 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 provisions of the Act.