The Indian government’s decision to do away with service charges at restaurants will make restaurant bills lighter. However, that does not come as good news for employees of the industry who look forward to tips as a supplement to their low incomes. Servers, waiters, kitchen staff and cleaners will be directly impacted by the decision to not pay a 10% service charge.
“Service charge is a fee collected for the benefit of the staff which includes everyone from the waiters to the personnel working in the kitchen who have served a consumer directly and indirectly,” shared Gurbaksh Singh Kohli, vice-president of Federation of Hotel & Restaurant Associations of India (FHRAI).
A service charge is an amount that is added to your bill in a restaurant to pay for person who comes and serves. A smaller percentage — 30% — of this amount can also be deducted in case of any breakages by the servers at the restaurants and hotels.
According to jobs review platform Glassdoor, the national average salary of a waiter is ₹16,400 per month in India. The salary estimates are based on 73 salaries submitted anonymously to Glassdoor by waiter employees. Data from other publications like Jobted, Talent, and Salary Expert is also in the similar range, if not lower.
Explaining further, Pradeep Shetty, Joint Honorary Secretary at FHRAI and senior vice president at Hotel & Restaurant Association of Western India (HRAWI), adds: “Depending on the grade of the employee, they make anything from ₹5,000 to ₹20,000 from these service charges and tips. It’s over and above their salary,”
In other countries — like the USA, UK, Canada and more — the restaurant staff works on a minimum wage but tips make a sizeable chunk of their take-home salary.
Now that the service charge is out of the picture, it is going to reduce the take home income for the people working at the ground level of the hospitality industry.
The only thing that would bring some relief to the people working in the industry is if the customers choose to pay the 10% service charge or build a habit of tipping, like it is in most Western countries.