Service charge ban: Staff at many restaurants fear dwindling tips, seek pay hike

NEW DELHI: With hotels and restaurants barred from charging service charges, waiters, cooks and other workers are approaching management for an increase in pay amid worries about losing money.

Prakash Singh Koranga, 27, from Uttarakhand who works as a chef at an outlet of popular franchise Moti Mahal Deluxe Restaurant in south Delhi, said that the service charge, which is divided among employees proportionately, is an "extra income" and "incentive also to give our best at job".

"I have been in this industry for about five years now. As a chef, I will continue to cook the best meals I can for guests, but the decision has affected our morale, as now we would have to be content with our salary only. Is it possible to survive in this time of inflation with just a salary of Rs 14,000? We will have to follow the new norms, so I will ask for a pay raise from my employer to compensate," he told PTI.

His sentiments were echoed by his kitchen colleagues and outlet manager Naveen Pandey, who has worked for the popular chain for 18 years.

"I may even switch to another place (restaurant) with better prospect if they don't hike my salary," said Pandey, a Delhi native.

The Central Consumer Protection Authority (CCPA) on Monday barred hotels and restaurants from charging service charges automatically or by default on food bills and allowed consumers to file complaints in case of violation, as consumer complaints have risen.

The decision received a mixed response from hoteliers, restaurant owners and associations across India, some of whom said the move would "not impact" their businesses, while others said it would impact their revenues and cause discontent among their employees who were used to getting a share of service charge every month.

Chefs, waiters and kitchen staff are the backbone of the restaurant business, with few desk staff or managers in front of the day-to-day operations.

PTI spoke to the staff of many large and small restaurants, cafes and hotels from Delhi to Kolkata and from Mumbai to Chennai will have to accept the new norms, but many have made it clear that they will not settle with their existing salaries.

In Kolkata, big restaurant brands include Mocambo, Peter Cat and the nearly century-old Aminia. "I am getting Rs 1,000-1,500 on an average from customers every day (in tips). We never ask but there are many who place an extra Rs 50-100 note with the bill and gesture us not to give it back. Don't know if tipping will be prohibited in the name of scrapping service tax," said a waiter working at an Aminia outlet in the New Market area on the condition of anonymity.

Aminia has no service tax calculated at the time of billing. But can patrons stop tipping? Will it be called illegal now, he asked. Suvendu Porel, a waiter at Peter Cat, said many patrons tip in person, are satisfied with the service and food and do so on their own terms.

Connaught Place, Central Delhi, is home to many great restaurants and posh cafes. In south Delhi, an official at Green Sky Cafe, which serves Korean dishes to the backdrop of BTS boy band music, said, "we don't charge service tax, so the decision won't impact us."

"I do the dishes. I have been working in this restaurant for the last 25 years. My salary is very less to feed a family of five in a city like Delhi. We used to get a little respite from the service charge. I used to get my share of Rs 1,800-2,000 per month as service charge.

The money helped me to pay for small expenses like bus pass. This will hit our lives. What is our fault," asked Rajesh (49), an employee at a restaurant in Connaught Place.

Many hoteliers, restaurant owners and associations across India have pointed to the dire impact the COVID-19 pandemic has had on the hospitality and food sectors and have raised concerns about the impact the move will have on business.

In Mumbai, Maharaja Restaurant's director and senior vice president of Hotel and Restaurant Association of Western India (HRAWI) Pradeep Shetty said, "The restaurant industry was slowly recovering after the disruptions caused by the pandemic, during which many workers had left and were engaged in other jobs.

It is very difficult to retain and hire employees in this business and at a time when we were trying to get the people who had left the industry this decision on service charge has made it far less attractive for people to join back."

Covid had hit this industry "very badly" and this decision on service charge "will continue to make it difficult" going forward." Now as owners, it has become very difficult for us and we have to work on it and see how we can compensate our workers," he added.

Sherry Bhatia, HRAWI president and managing director of Hotel Golden Swan, said that no one was forced to pay the service charge or any customer was turned away if they refused to pay it.

"The industry was expecting the enactment of a comprehensive law that would put curbs on levying charges over and above the cost of a product or service and which would be applicable across all industries," he added.

M Ravi, a senior member of the Tamil Nadu Hotel Association, said that hotels in Chennai and Tamil Nadu do not charge any service charges.

"Some hotels were charging it because if accidentally cutlery gets damaged or broken while consuming food that cost is recovered from this. Some amount also goes to the labour but it is shared across departments among the employees," he told PTI. Removing service charges would impose additional expenditure on hoteliers, he said.

The Kerala Hotel and Restaurants Association (KHRA) said that service charge is not levied upon customers by its members.

"Moreover, it is a reward given by a customer if he or she is happy with the service or food quality, and therefore, it is the customer's choice," KHRA state committee president G Jayapal said. "As a result, the Central Consumer Protection Authority (CCPA) direction will not affect us," he added.

With PTI inputs