Food for thought: Voluntary service charge is better than tipping
Some years ago, my wife, daughter and I went to a diner in central Manhattan for breakfast. It was their first trip to New York. The ambience was pleasant, the portions huge, the cooking top-class (excellent bacon and sausages, the fried egg a perfect sunny-side up), service efficient.
Our waiter was an Indian and a very courteous one at that. He chit-chatted with us. The sun was out, the weather balmy; it was the ideal way to start the day. Except that it didn’t quite happen as planned. The tab came to $50 and I left a tip of 10 per cent as advised by friends back in India.
A sudden transformation came over our former countryman and he turned vicious. He quickly collected the other waiters and barred our exit, all the time mouthing "you miserly Indians", "Scrooge" (a word he probably picked up in his line of duty), "uncaring", "spoiling the name of India" and more.
My family was aghast and deeply embarrassed. The whole restaurant was watching. I wanted to slug it out (even pick up the $5 I had left on the table) but my family would have none of it and demanded that I pay $5 more and leave. I did that but I was raging inside. All he had to do was ask nicely. But in the US, tip is not a matter of courtesy but a compulsion. You ignore it at your own peril.
Later, I learnt that though the federal minimum wage for adults in the US is $7.25 an hour, in industries where tipping is routine, employers are legally allowed to pay wages as low as $2.13 an hour. Tipping thus is the primary source of income for waiters and any parsimonious behaviour from patrons can and does lead to aggressive consequences.
What about India? The condition in the unorganised sector is characterised by subsistence pay, no social security, no accounting, no pucca billing, and no taxes. Check any dhaba on the highway. Check any small eatery in any town. You will most likely get a kacha bill.
Even if it is a computerised bill, chances are that many such bills won’t be recorded in the books. Indians frequenting these small establishments are loath to tip; unless it is the shacks of Goa who love the foreign tourists for their generous gratuity. It is in the unorganised sector that tipping can make a huge difference to the underpaid staff.
The organised sector is different. Here the salaries are much above the minimum wages. The staff is not critically dependent on tips. Tips, usually modest, are the norm. However, over the past years, there has been a gradual introduction of "service charges" in the range of 5-20 per cent by restaurants, to supplant tipping, though some would argue that it serves to supplement tipping (when friendly waiters hover around and ask you whether the food and service were satisfactory and your conscience forces you to take out your wallet).
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| What do restaurants do with the "service charges"? (Photo: Reuters) |
That’s why the government has recently clarified that restaurants' billing "service charges" are optional and the consumer has discretion to pay it.
The department of consumer affairs in a notification asked the states to advise hotels and restaurants to disseminate information through display at an appropriate place on their premises that the "service charges" are discretionary and voluntary and a consumer dissatisfied with the services can have them waived off.
The move came in the wake of several complaints that consumers were forced to pay these charges irrespective of the kind of service provided to them. The Hotel Association of India replied that the service charge was discretionary and should a customer be dissatisfied with the dining experience, he or she can have it waived off.
So, what do restaurants do with the "service charges" so received? Ideally, these should be distributed to all the staff (including the kitchen staff, reception, doormen, washroom attendants, who are normally not on the customers’ radar). But the staff claims otherwise.
They allege that a large part is pocketed by the owners. The owners, however, claim the entire amount is distributed among all the staff. Some claim the amount is utilised to pay for breakage, to compensate for broken crockery, to provide uniforms, to maintain hygiene and to pay for medical expenses, and the balance money is distributed.
A lack of a monitoring system makes the end usage an opaque exercise. Even if the owners are to be believed, the expenses incurred by them are clearly their responsibility and should not be utilised out of the reward given to the staff by customers (even though extracted by the restaurant in the form of "service charges").
The government’s ruling is welcome. The element of voluntariness should remain in any form of gratuity payment. The payment is contingent on the quality of service received, the quality of food and the ambience.
But what form should this gratuity take - voluntary "service charges" or tipping? "Service charges" have their advantages, provided these are reasonable, have slab rates based on the total bill, and the establishment has clearly given a declaration on the bill that the charges are distributed equally to every staff member without any netting off.
The advantages are that it’s not only your server who is rewarded but every staff member. The quality of your dining-out experience depends on all of them and singling out your server or anybody else is iniquitous and unfair to those who open the door, or take your reservation, or assist in the kitchen, or keep the washroom clean.
And for those who are using credit cards for business entertainment, it becomes convenient. Once the "service charge" is on the bill, even with the voluntariness, it would be harder to refuse it since most people would avoid the embarrassment the refusal to pay it entails. Indians, by and large, are poor tippers, and a voluntary service charge would take care of that situation. But if the experience is pathetic, then don’t pay or pay less.
And if you are in a particularly good mood after an excellent experience and want to tip the waiter or the sommelier or the chef, nobody stops you from opening your purse strings and rewarding them. This, of course, would be in addition to the "service charges". The other staff will not begrudge any one of them being singled out for an additional reward.
The press recently reported a mystery diner forking out a £1,000 tip after a £79 meal at an Indian restaurant in northern Ireland. He said he wanted to add the huge service fee for the excellent food. The money was split between all the staff working that night as the customer said it was for everyone.
How someone treats a waiter or doorman can tell you so much about a person. But since we are still uncomfortable about tipping, a voluntary "service charge", properly structured and implemented, is a good beginning.