In a meeting with DoCA, FHRAI clarifies that a restaurant collecting service charge is neither illegal nor is in violation of the law. Addressing the concerns over transparency in adding service charge in the bill, the Association further clarifies that the charge is disclosed in advance and the same is clearly printed as a separate heading in the bill as a “charge”, not a “tax”. Thus, there is complete transparency with regard to the amount, the rate and the purpose of the charge. In its response, Department of Consumer Affairs (DoCA) said that they could gather a holistic view on the subject from different stakeholders and after analysing all the aspects they may formulate a policy if required.
“Information regarding the amount of service charge is mentioned by restaurants on their menu cards. Unlike many other service providers that charge customers under the guise of ‘Convenience Fee’ or ‘Airport Charges’ or ‘Usage Fee’, restaurants act fairly and clearly mention the amount being paid and its purpose. Since there is nothing hidden or deceptive about the levy, it can’t be considered unfair trade practice. We have advised our members in the event they choose to collect service charges, they must state the same clearly on their menu itself. Since it is a socio-economic measure, the rationale behind including it in the bill as a separate charge is also to clearly disclose to the customers that a specified portion of the amount paid by them is being given to the staff of the establishment,” says Mr Pradeep Shetty, Jt. Hon. Sec., FHRAI.
