Service Charge Norms

Subject :Polity

Section :Governance

In a bid to protect consumer interest, the Department of Consumer Affairs on Thursday said that it will bring out a “robust framework” to ensure compliance with norms relating to the service charge levied by hotels and restaurants.
This issue regarding service charge included “compulsory” levy of service charge by restaurants and hotels, addition of the service charge by default without consent of consumers and suppressing the fact that such a charge is “optional and voluntary”.
DoCA also reiterated the guidelines on fair trade practices related to charging of service charge by hotels and restaurants, that were issued in 2017, should be followed.
The guidelines state that a customer placing an order amounts to agreement to pay the prices on the menu along with applicable taxes.
However, charging more amounts to “unfair trade practice” under the Consumer Protection Act.
Restaurants claim that a major chunk of the service charge thus collected goes to the staff, while the rest goes towards a welfare fund to help them out during good and bad times.
A service charge ensures all staff members are rewarded evenly.