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Is it compulsory to pay service charge?

| 10/10/2017 | 8 Comments

Is a service charge in the food industry or hotel mandatory, or discretionary? I had assumed this was to reward good service. If I felt I didn’t get good service I wouldn’t expect to have to pay a tip/gratuity. It seems that some restaurants and hotels view the service charge as the charge to pay their staff …surely that’s the employers’ cost?


Auntie’s answer: To tip or not to tip is one of those dilemmas that pops up in my inbox every so often (See Are diners required to pay automatic gratuities? and Need tips on proper amounts for gratuities). On previous occasions I have gladly offered my opinion on the issue but this time I decided to seek the advice of the Department of Labour and Pensions to get their view on the mandatory aspect of your question.

A labour officer pointed to the law for an answer. The Labour Law (2011 Revision) offers a very detailed and dense definition of a gratuity, which I will not subject any readers to. Instead, I can summarise the 100 words of that passage to this: gratuities are discretionary. If you really want to read the long version, go to page eight of the law and see how far you get.

However, you refer to service charge and the waters get a little muddy here. While the law specifically covers gratuities, the officer explained, it does not address service charge, which he said may be mandatory. But if you are able to get through the legal definition of gratuity, it does mention money collected “in respect of the quality of service afforded to (a) customer)”, based on a fixed percentage of the amount charged and “expressed to be in respect of service”.

That to me sounds a lot like service charge.

Personally, I have never liked being forced to pay a tip by the inclusion of an automatic 15% gratuity, especially if the service wasn’t good. But it does seem that the law is on the side of discretion when it comes to tipping, though I anticipate a lot of pushback if anyone refuses to pay the automatic gratuity if the additional amount on top of the bill is labelled “service charge”.

The law mentioned in this column can be found on the CNS Library

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Category: Ask Auntie

Comments (8)

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  1. Anonymous says:

    Theservice I receive is almost always adequate to support a 15% service charge. If it is good service I add to it. I prefer not to have a charge forced on me, but some places think it is necessary to protect the staff from the 5%ers. What does gripe me is the place that prominently states on the tab that a gratuity is not included and then in fine print says that a 15% service charge will be added to parties of TWO or more. I have considered asking for adjacent tables for me and my wife just to screw with them. And don’t get me started on drink prices.

  2. Anonymous says:

    The locals are getting restless….

  3. Anonymous says:

    Just interact with your server in an English accent and then walk off without tipping. Saves a fortune.

  4. Anonymous says:

    Any known restuarant on island does not use the auto grat to pay their staff. Most servers would know that is wrong and wouldn’t work for that employer. Any server who does is an idiot. The wage for servers on island is $4.50 and the servers on their shift have to tip out generally 5 % of their gratuities to hosts, kitchen, service bartender. So basically if you don’t tip a penny, it will have actually cost your server 5% to serve you. Money out of their pocket to have you come in and dine. Yes it’s annoying to feel forced to pay the %15 added to your bill, but if you’re unhappy with the service speak up, ask for a supervisor etc. There is always a solution to any issue you might have. There is no excuse for rude service but if the service was just a little slow and maybe not overly happy, maybe that person was having a bad day. Like other humans, people in the service industry also have bad days.

    • annonymous says:

      the acronym ‘T.I.P’ stands for ‘to ensure promptness’. It was never meant to dictate or pre-determine how much a guest should give a server.

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