Service charge

Restaurant service charge not mandatory but voluntary with customer consent: Center

Considering that several restaurants levy service charges from customers by default, the central government convened a meeting with restaurant owners on Monday to discuss the issue of service charges levied by restaurants from their customers and also put in place caution against forcing customers to pay fees. Meanwhile, the government has also reminded owners that collecting service fees from customers is completely voluntary and cannot be imposed on them by law.

In the same vein, the Department of Consumer Affairs (DoCA) has also convened a meeting with the National Restaurant Association of India on June 2, 2022, where it would discuss the issues regarding service charges imposed on customers. This came after the DoCA became aware of several media reports and complaints registered by people on the National Consumer Helpline where they claimed that several restaurants were charging service fees by default.

Following this, Rohit Kumar Singh, Secretary of the Department of Consumer Affairs wrote a letter to the National Restaurant Association of India informing them that customers are obligated to pay service charges set by restaurants.

“Given that this issue affects consumers as a whole on a daily basis and has significant consumer rights ramifications, the department has found it necessary to examine it more closely and in detail,” the letter said.

The letter also noted issues of concern that need to be discussed at the meetings. These include:

  1. Restaurants making service charges mandatory
  2. Add service charge in the invoice under cover of other fees or charges.
  3. Remove to consumers that payment of service fees is optional and voluntary.
  4. Embarrassing consumers in case they refuse to pay service charges

Government guidelines on service fees

The Ministry of Consumer Affairs had already published a series of guidelines in April 2017 with reference to the charging of service charges by hotels or restaurants. The guidelines make it clear that a customer’s entry into a restaurant cannot in itself be construed as a consent to pay a service charge, further adding that such a restriction on the consumer’s entry by forcing them to pay service charge as a condition will fall under the Consumer Protection Act.

In addition to this, he also mentions that if placing an order by a customer reflects his agreement to pay the prices on the menu card, charging anything else without his consent will constitute unfair business practices.

In this respect, consumers have the right to turn to a consumer disputes redress commission for redress.

Image: PTI