{"id":194766,"date":"2022-07-08T16:58:50","date_gmt":"2022-07-08T11:28:50","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=194766"},"modified":"2022-07-08T16:58:50","modified_gmt":"2022-07-08T11:28:50","slug":"barring-restaurants-from-levying-service-charge-is-unfair-reeks-of-discrimination","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/barring-restaurants-from-levying-service-charge-is-unfair-reeks-of-discrimination\/","title":{"rendered":"Barring restaurants from levying service charge is unfair, reeks of discrimination"},"content":{"rendered":"

Source<\/strong>: The post is based on an article \u201cBarring restaurants from levying service charge is unfair, reeks of discrimination\u201d published in the Indian Express on 8th<\/sup> July 2022.<\/p>\n

Syllabus<\/strong>: GS 3 Indian Economy, Government Industrial Policies<\/p>\n

Relevance<\/strong>: Service Charges and Issues in the Hospitality Industry<\/p>\n

News:<\/strong> In recent days, the Central Consumer Protection Authority (CCPA)<\/strong> issued guidelines wherein it has barred hotels and restaurants from levying service charges<\/strong> on the food bills of the customers.<\/p>\n

What is the service charge?<\/strong><\/h5>\n

A service charge is a charge linked to the sales of the restaurant, which is independent of wages. It isn\u2019t revenue for the restaurant since it is distributed among workers.<\/p>\n

What are the arguments for the continuance of the service charge?<\/strong><\/p>\n

The SC (Supreme Court)<\/strong>, HCs (High Courts)<\/strong>, the National Consumer Disputes Redressal Commission<\/strong>, and the Income Tax Appellate Tribunal<\/strong> has upheld the legality of levying of service charge<\/strong> in various judicial pronouncements.<\/p>\n

The different businesses have different pricing models<\/strong>.<\/p>\n

Service Charge <\/strong>formalizes equitable and fair distribution<\/strong> among the restaurant’s workforce. Restaurants have many people working in the background that do not interact with the customer. These workers have a distinct disadvantage<\/strong>, from an earning perspective<\/strong>, in comparison to workers who interact with customers (getting tips or other incentives).<\/p>\n

Service charge induces price transparency<\/strong> to the customer as well as the restaurant worker<\/strong>. \u00a0There are different costs<\/strong> for dine-in, takeaway, and delivery services for a particular restaurant. So, in addition to a baseline menu price<\/strong>, a uniform service charge adds transparency to the pricing system.<\/p>\n

If the service charge is removed, the restaurants will have to increase the menu prices<\/strong>. Further, the restaurant owners<\/strong> will have to renegotiate rental contracts<\/strong> because of the butterfly effect<\/strong>. This is because, nowadays, other than the fixed rent, the restaurants also enter into \u201crevenue share<\/strong>\u201d clauses built into their lease contracts.<\/strong> Service charge is kept outside the mandate of shared revenues. But, if the service charge would be included in the menu, it will have to be shared, accordingly.<\/p>\n

There has to be a robust conversation around<\/strong> service charges as it actually helps restaurant workers to earn their fair share and further, it also optimizes operations<\/strong> for a business owner.<\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on an article \u201cBarring restaurants from levying service charge is unfair, reeks of discrimination\u201d published in the Indian Express on 8th July 2022. Syllabus: GS 3 Indian Economy, Government Industrial Policies Relevance: Service Charges and Issues in the Hospitality Industry News: In recent days, the Central Consumer Protection Authority (CCPA)… Continue reading Barring restaurants from levying service charge is unfair, reeks of discrimination<\/span><\/a><\/p>\n","protected":false},"author":10308,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10500],"class_list":["post-194766","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1704710967},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/194766","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10308"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=194766"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/194766\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=194766"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=194766"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=194766"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}