Restaurants Say Directive On Service Charge To Impact 8.5 Million Employees

New Delhi: The decision of the Department of Consumer Affairs to make levy of service charge optional or discretionary will affect around 8.5 million employees associated with the food service industry, said Riyaaz Amlani, the president of NRAI (National Restaurant Association of India).

"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," Mr Amlani told news agency IANS. (Also read: Know Your Restaurant Bill. Now, Service Charges Not Mandatory)

The department on Monday issued 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.

"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," Mr Amlani added.

The decision was taken in lieu of complaints received from consumers that 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.

"This decision is a double edged sword.If the same becomes voluntary then the salaries will have to be renegotiated and the whole industry would go into a tizzy," Shivam Bhaskar, owner of Number 31, told IANS.

A clarification was sought from the Hotel Association of India which replied that the "service charge is completely discretionary and should a customer be dissatisfied with the dining experience they can have it waived off", the department said.

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 provisions of the Act.