Service charge by restaurants not illegal: FHRAI
   Date :30-May-2022

Business Bureau
Hospitality industry body FHRAI on Friday asserted that service charge imposed by restaurants is not illegal and it is up to customers to decide whether they wish to patronise those establishments or not.
Ahead of a meeting on June 2 called by the consumer affairs ministry to discuss the growing complaints that consumers are being forced to pay service charges, the Federation of Hotel & Restaurant Associations of India (FHRAI) said the service charge is a proposal from the restaurant or an establishment to potential customers.
“It is for the customers to decide whether they wish to patronise the said restaurant or not...There is nothing illegal nor is it in violation of the law for restaurants to collect a service charge,” FHRAI Vice President Gurbaxish Singh Kohli said in a statement.
Arguing that it is a common and accepted practice in India as well as several other countries, FHRAI said service charge, “colloquially known as 'tip', is the amount paid to the staff of the restaurant or other similar establishment by its guest.” Information regarding the amount of service charge is mentioned by restaurants on their menu cards, so that customers are well aware of this charge before availing the services, it said.
FHRAI Joint Honorary Secretary Pradeep Shetty said if a guest has any objection to paying service charge then, it can be removed from the bill.
“It is a common practice by even other service providers that charge a certain 'convenience fee' for providing services to customers. Services like train and air ticket booking through websites or portals, food ordered via website or mobile apps, or movie tickets booked through online portals all levy a convenience fee on the customers.
“But, it is sad to see constant demands being made from the hospitality industry on one matter or the other,” Shetty said.
FHRAI also said it has advised its members that in the event they choose to collect service charges on behalf of their staff by including it in the bill presented to the customer, they must state the same clearly on their menu itself so that the guest is well informed of the same.
Kohli said if a customer mentions ahead of the bill that they would not like to pay service charge, then it is not charged.