Recently, a scuffle broke out between a group of diners and staff at Float by Duty Free, a restaurant in Noida, over the latter levying a service charge of ₹970 on a bill of ₹11,209. As a result of the altercation, which was captured in a now-viral video, five people were arrested and two cross FIRs were registered. This incident is the latest of many to bring the contentious issue of service charge into the limelight, raising questions about its legality and lack of clarity surrounding it.
In 2022, the Delhi High Court put on hold guidelines by the Central Consumer Protection Authority (CCPA), which had prohibited hotels and restaurants from levying service charge on bills “automatically or by default”. In April 2023, however, the court clarified that the interim stay should not suggest that service charge is approved by the court. Since there are no clear guidelines at the moment, restaurateurs feel that it is up to the eatery to take a call regarding the charge, while also catering to customers’ requests.
Amit Bagga, co-founder of Daryaganj, blames the blurry guidelines for this confusion among diners. “There is a stay order, which means the restaurant can decide for itself. But, I see about 25-30% diners asking to remove it, which we then do,” he says, adding, “For such situations, we have trained our staff to ask the guests for feedback and why they didn’t like the service.”
Chef-entrepreneur Tarun Sibal, co-founder of Khi Khi, notes that technically, levying service charge is “not illegal”. He says, “Restaurants put it in big bold letters at the entrance and on menu cards. The charge usually varies between 3-10% as per global standards. Although we are more than happy to remove it when a customers asks for it, one needs to understand that service charge doesn’t go in our pockets. It is divided among the staff, housekeeping security and others.”
{{/usCountry}}Chef-entrepreneur Tarun Sibal, co-founder of Khi Khi, notes that technically, levying service charge is “not illegal”. He says, “Restaurants put it in big bold letters at the entrance and on menu cards. The charge usually varies between 3-10% as per global standards. Although we are more than happy to remove it when a customers asks for it, one needs to understand that service charge doesn’t go in our pockets. It is divided among the staff, housekeeping security and others.”
{{/usCountry}}On the other hand, there are also restaurateurs who choose not to levy the charge in order to avoid “unpleasant experiences”. Nandini Jain, co-founder, Bonne Foi 65, says, “A scuffle could ruin the mood after a great dining experience. So, instead of a service charge, we promote incentive-based compensation.”
Diners, too, feel the brunt of this unclarity. Nikhil Anand, a 29-year-old entrepreneur from Rajouri Garden, says, “Dining out in Delhi is already very expensive. So, only if there’s exceptional service, would I like to pay extra 10%. At other times, I just politely refuse. Getting into a brawl is way too extreme”. Another resident, Aakriti Ahuja, 23, MBA student says, “Honestly at times, it is so awkward to get it removed because I feel waiter kya sochega but kabhi kabhi itni buri service hoti hai like delayed or incorrect orders, so why should I pay then? Moreover, I prefer to tip the individual rather than allowing restaurant to add it to the bill because I don’t even know if that person will be getting any share.”
Grey zone
Restaurants need to clearly state on the menu card or display about levying service charge. An eatery can charge between 3-10% of service charge. Although, there are no set guidelines at present which makes it mandatory. Customers can politely refuse to pay for it, depending on the service received or their choice. Restaurants cannot force a customer to pay for it.
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