|
Spotlight
The tipping point
Once a service is rendered, it is upto the customer whether
they wish to be generous enough to offer a tip to the service personnel or not.
But how does the organisation deal with tipping? By Sanjeev Bhar
 Service
tips can sometimes be included as service charge in the bill and it depends
on the establishments' policy decisions whether to make it accountable or not.
This comes about from the notion that hospitality is always witnessing a shortage
of quality lower-rung service staff in the F&B department owing to poor
wages.
At the macro level, this is true for any service industry.
Yet, the hospitality sector differs. According to industry professionals, salary
perks are company issues that often vary. Similarly, tips and its apportionment,
if collected through the management as service charges, would depend on the
company's norms. But the question of how tipping is perceived today and what
are its legal implications call upon a scrutiny to get the real picture.
| Service charges are collected by management of the
hotel on behalf of their employees in lieu of direct tips and the same is
paid to their employees at a later date. Such amount collected as 'service
charges' will not constitute wages under Section 2(22) of the ESI Act. In
the case of ESIC v/s M/s Rambagh Palace Hotel, Jaipur, the High Court of
Jaipur has held that 'service charges' are not wages under Section 2(22)
of the ESI Act. This verdict of the High Court of Jaipur was accepted in
the ESIC and hence no contribution is payable on 'service charges'.'
(Earlier instructions were issued vide letter No.P-12/11/4/79-Ins.Desk.I
dt. 18.9.79)
Source: Employees' State Insurance Corporation
website
|
Outcome of service
Tips are sometimes charged from guests through their inclusion in the bill or
left to the discretion of the person receiving the service. Mansoor Adil, executive
vice president of Sarovar Hotels, says, "As a policy, we do not levy service
charge. In fact, most prominent hotels never charge service charge." He
goes on to say that any monetary exchange between the guests and personnel rendering
the service has no management role whatsoever. "That is strictly between
the guests and service person," Adil adds.
So how is tipping viewed today? This is difficult to answer because it has different
angles to it. The difference in opinion comes from various parties involved.
According to service employees though, tips are distributed through a common
pool and the separation is on the basis of points (ie, time period served in
company and/or seniority basis) one possesses. This not only creates alienation
among employees but also from the management.
There is a general feeling that because tips have become an integral part of
services in hotels, received directly (through service charges) and indirectly
(received by service personnel), the management keeps the salary wage at a minimum
to reduce its cost to employees. Hoteliers though are not ready to buy this
and neither are they open to disclose the reason for the sorry state of remuneration
in the lower rung of hospitality. Adil says, "Every company is guided by
its own policy and it is not appropriate to assign notions to general comments
made."
| Tipping in hospitality is seen as a conventional
way of satisfying service personnel helping customers/in-house hotels guests.
But the other side of the coin works equally well for hotels. No-frills
hotels rely on self service to reduce manpower for maintaining a property.
Ginger, for instance, has made this as its pitch where guest wouldn't need
to tip.
This shows that tipping plays on the minds of the
management even if hotels try every bit possible to sideline issues related
to that as none irrespective of whether "service charge" is
applicable or not according to hotel policy.
|
Apportionment of tips
The apportionment of tips is an area for concern. It is because tips are not
considered important unless received as a service charge. Gyanendra Mishra,
an advocate at Bhasin & Co Advocates, informs, "Tips do not come under
the definition of wages. But service charge can be approved as part of wage
bill and are liable to TDS."
Citing an example of Taj's Rambagh Palace Hotel at Jaipur, he says, "In
the past, hotels have gone to courts to settle down issues related to management
and employee unions or in issues where wage factor is involved in some form
or another." Rambagh Palace Hotel thus, by moving to Jaipur High Court,
ensured that it was not liable to make any contributions since service charge
is only meant for employees.
Nonetheless, it is perceived that correct norms are either not followed or taken
care of in hotels in India. Management of tips is thus always a question in
the minds of employees. Irrespective of what is being talked about in public,
the inside story about tips and its management is still ambiguous and believed
to be one of the key considerations taken up while deciding on the salary bracket
of employees in the lower end of the pyramid.
The topic of tips and its implications on employee work environment seldom comes
to light. Even if it does, it is due to the legal entanglement resulting in
court cases. Nonetheless, the apportioning of tips remains motivation for employees.
|
