Abu Dhabi's non-tourist establishments must stop charging 10pc levy, after it was declared a violation of consumer protection laws.
Service charge that was hard to stomach
ABU DHABI // If you're eating out today, check your bill. In most cases, the 10 per cent service charge should not be there. A ban on service charges in non-tourist restaurants goes into effect today. Restaurants in the capital said the Department of Economic Development (DED) had ordered the scrapping of the service charge at the beginning of January, with a month-long amnesty. Their time ran out yesterday.
"The Government gave us until the end of January. Tomorrow is the day. We have IT and accounting working on it as we speak," the manager of a restaurant in Abu Dhabi, who asked to remain anonymous, said yesterday. She said the measure would probably be a net positive for staff. "As a manager, I feel that it's going to be a loss in revenue but the guest will be able to be more generous and the staff will receive more money."
Other eateries confirmed that they received the notices and planned to comply with the ruling by today, with one saying that a DED inspector gave the management the notice in person after asking whether they included service charges in their bills. Fareed al Zubi, the chief lawyer at the department, said the amnesty was likely given to allow cafes and restaurants to adjust their billing procedures and software.
With the end of the amnesty, the Abu Dhabi branch of the DED was going to send out inspectors to make sure that restaurants were not defying the ban, he said, but also noted that tip-offs from customers were going to help determine which restaurants the inspectors target. Al Safadi, a restaurant in Dubai that continues to levy a service charge, also said it had been sent a letter by the emirate's DED dated January 5 that gave them a month to remove the fee.
"They did this as if the service charge we take is an extra money that we charge the customer, so they considered it fraud, but this is actually from the cost of serving the customer," said Fadel al Safadi, one of the chain's managers. Responses to the ban have been varied. Some restaurants have kept service charges on the bill for the time being. Others have raised their menu prices to compensate for the lack of a service charge, and some have simply removed the charge, which has never been legal, except at tourist restaurants.
Managers whose restaurants have not been levying a service fee questioned the need for the additional charge, claiming that the money rarely makes it into the hands of waiters. "We consider it in the customer's right whether to pay or not," said Samir Abchee, the operations manager of Kabab-ji Restaurant in Dubai. "If you have all the costs of food on the bill I don't see why you should charge extra."
"I've been in the business for 10 years and if it's in the bill, it goes to the restaurant" instead of staff, he said. Sven Mostegl, a food and catering consultant based in Abu Dhabi, said restaurants were not likely to comply unless they faced punitive measures. Mr al Zubi said these would include fines as well as closures for repeat offenders. In late December, Sultan bin Saeed al Mansouri, the Minister of Economy, declared service charges a violation of consumer protection laws.
Service charges are proscribed by law for restaurants with tourist licences, usually found at hotels or tourist attractions. The maximum allowed service charge is 10 per cent. A fifth of service charge revenue must go directly to staff, but most restaurants that have been illegally levying the charge on customers did not pass on any of the money to waiters, which has outraged many customers. email@example.com