National Restaurant Association of India says guidelines are not laws.
The guidelines issued by the Ministry of Consumer Affairs last year to make service charge optional in restaurants, pubs and hotels are being openly flouted by most of these establishments across the national capital region (NCR).
Defending the flouting of rules, the National Restaurant Association of India (NRAI) has said that guidelines are not laws and that service charge is legal and does not violate provisions of the Consumer Protection Act, 1986.
Riyaz Amlani, NRAI president, said, “Guidelines are not laws. Since the same is mentioned in the menu or price list and informed to the customer, it does not violate the provisions of the Consumer Protection Act, 1986. Levy of service charge directly benefits the 6 million people employed in the industry. Of these, over 60% employees depend on service charge to augment up to 30% of their income. All the organised food and beverage operators employ the service charge method to ensure that all employees are beneficiaries of service charge and not just waiters, but also cooks, toilet attendants, and cleaners. Unless there is a legislation, restaurants will continue to levy service charge.”
Restaurants argue that almost 30% of the salary of their staff is collected through service charge that is charged from customers and it cannot be compromised with.
Mohit, assistant manager of the Irish House cafe in Noida, told The Sunday Guardian, “30% of salary of our guests comes from the service charge we levy our customers. We levy service charge for the services we provide to our customers, the comfortable sofas, smoking zone, the AC, the television sets and everything is available to customers at their seats.”
The My Bar Square Pub and Lounge at Connaught Place hands over a slip to all its customers, saying 10% service charge would be levied. A staffer at the restaurant said: “We are charging for the service we are providing to our customers and it is not that we are arbitrarily charging the amount. We hand over the slip so that customers are aware of this charge and they do not disagree to pay this during billing. If one does not wish to pay this charge, you might go to some other place.”
Teddy Boy, a pub in Connaught Place, has posted a sticker at its entrance which says: “10% service charge would be levied on every bill”. Asked why it is not optional, a staff of the restaurant said, “It is the management’s decision and if you agree to this, you can go upstairs or else it would not be possible for us to waive this.”
At several places, restaurant goers are not given an option to waive the extra service charge as the management argues that the clause for service charge has already been printed on the menu or price list, thereby presuming that to be an agreement between the restaurant and the customer.
Varun Dhody, a regular restaurant goer, told The Sunday Guardian, “It is not a secret that all restaurants are charging service charge despite the Ministry of Consumer Affairs’ guidelines; this leads to our bills sometimes exceeding by over Rs 700. Most restaurants also frown on being asked to waive the charge, asking instead ‘have you not taken the service?’ We should be given an option to decide whether to pay and how much to pay. We cannot be forced to pay an amount which has been unilaterally decided by the restaurants assuming that their services would be liked by the guests and therefore they would have to pay.”
In April last year, the Ministry of Consumer Affairs had issued clear guidelines on service charge after receiving several complaints from consumers. The Ministry’s notification had said, “It is only after completing a meal that the customer is in a position to assess the quality of the service and decide whether or not to pay a tip and if so, how much. Therefore, if a restaurant considers that the entry of a customer to the restaurant amounts to his or her implied consent to pay a fixed service charge, it is not correct. Further, any restriction of entry based on this amounts to falling under restrictive trade practices which is unjust.”
The notification further said, “The bill presented to the customer may clearly display that service charge is voluntary and the service charge column of the bill may be left blank for the customer to fill up before making the payment.”
Aisham Sanyal, CEO, Consumer Voice, a non-profit organisation for consumer rights, told The Sunday Guardian that the problem is that the Ministry has just issued the notification as a guideline or an advisory and it is not binding on restaurants, which is why most of these restaurants get away with this.
“It is unfair on part of the restaurant to decide on the percentage of service charge that it should levy. It should rather be left to the customer to decide how much they liked their service and pay accordingly. The Ministry needs to bring in a law or an order to tackle this problem or else the restaurants will not stop compulsory charging of service charge. We have also seen cases where customers have gotten into a verbal spat due to this, which can only be stopped when a law is enforced,” Sanyal said.
Commenting on the issue, spokesperson for the Ministry of Consumer Affairs, told The Sunday Guardian that the Ministry stands by the notification issued last year. However, asked if any action has been taken against restaurants flouting the guidelines, the spokesperson said, “For such specific questions, please mail your queries, we will reply at the appropriate time.”
However, The Sunday Guardian did not get any reply from the Ministry till the time of going to the press despite sending emails to the spokesperson and secretary of the Ministry of Consumer Affairs.