Minister for Consumer Affairs, Food and Public Distribution, Piyush Goyal said on Friday that restaurants cannot include service charges to food bills at their discretion and that the choice of paying tips entirely depends on the customer. He added that restaurant owners are free to hike the prices of their food menu to be able to pay higher salaries to their employees.
Restaurant industry bodies have been arguing that the amount collected through service charges is meant for the benefit of the staff.
“You (restaurants) cannot just add a service charge on a bill… If you feel that some more benefits are to be given to employees, it cannot be forced on customers. You can raise prices to give hikes,” the minister said. He added that the Department of Consumer Affairs has been getting complaints on the National Consumer Helpline from consumers against service charges levied by restaurants and hotels.
“You are free to give raises to employees and increase rates. But if there is a hidden cost, how will the people (consumers) know the real price?” he said.
The Department of Consumer Affairs said that it will be coming up with a “robust framework” to protect consumer interests, as according to it, service charges are an “unfair trade practice”.
This statement came after DoCA met with restaurant industry stakeholders to discuss various issues related to service charges. This includes issues such as compulsory levy of service charges, adding the charge by default without the express consent of the consumer, suppressing that such a charge is optional and voluntary, and embarrassing consumers if they resist paying such a charge.
