Ban on service charges prompts restaurants to raise prices though they are not supposed to; patrons react by leaving less on the table.
Staff forced to quit as the tips dry up
ABU DHABI // Restaurant staff are complaining the recent ban on service charges has slashed their income by a third - and that many of them are looking for work outside the country. They also say that steps taken by restaurants to offset the loss of income from the ban, such as raising menu prices and passing on some of the tips from customers to managers - are contributing to their woes.
"It's like demoting us," said a waitress at a franchise restaurant in Abu Dhabi who, like all those interviewed, agreed to speak only on condition of anonymity to protect their jobs. She said the ban had cost her Dh500 (US$135) a month - which had added more than 40 per cent to her monthly salary of Dh1,200. Increasingly, she said, her colleagues and friends in the industry are looking for new jobs abroad.
"The situation for the last three months since the service charge was removed, our staff have been ... some are quitting, some going home, some are just going to finish their contract," she said. "They don't plan to stay for a bit longer because of that." In December, Sultan bin Saeed al Mansouri, the Minister of Economy, declared the service charges "illegitimate" and a violation of the consumer protection law.
Restaurants were given a month-long amnesty that ended in early February to comply. Hotel restaurants are still allowed to apply the charge, which is usually 10 per cent of the bill. But the service charge saga has also shed light on the low salaries of restaurant workers, some of whom earn as little as Dh1,200 a month. Most say that when they were hired, they were promised a basic salary, in addition to their tips and money from the service charges.
Now many have lost as much as Dh700 a month. "Before we were getting the service charge because our basic salary is, imagine, Dh1,200," said a waitress at a restaurant at Al Wahda Mall in the capital. "Getting the service charge we could get Dh1,800 a month." She added that after the ban came into effect "the first two weeks were OK". After that, she said, her tips began to dry up as customers noticed that the restaurant had increased its prices, a practice the Department of Economic Development deemed illegal.
"They changed the menu, they changed the price," she said. "Most of the staff, they don't want to renew their contract. The Government needs to listen to the small staff members and to increase their salary. They are searching on job websites." Another waitress said restaurant workers are also being demoralised because they are forced to turn over their tips to management or share them with other staff members.
Staff at one cafe in Abu Dhabi said their managers often take a percentage of the weekly tips, despite the fact they are rarely at the restaurant and earn bigger salaries than them. "We're a lot better than others because we earn Dh2,750," said a waitress at a restaurant in the capital that did not impose a service charge before the ban. The waitress's salary does not include food and accommodation.
In early March, her restaurant introduced a policy to handle customer tips centrally, distributing the money equally to staff members - including managers, regardless of how much or little time they are at the restaurant. "We get a lot of tips but it's centralised," she said. "Before, it was OK with us that if we did not have the service charge because we had personalised tips. But now they removed it also. Everyone shares including the manager and the supervisor."
"Every day we were earning extra money. Our salary is all sent home to the family and we're just taking our allowances from the tip, but now we can't do it", she said. She believes the practice is unfair. "You are a server, you're not going to give extra effort to get the tips." Legislation often concentrates on consumers and does not take into account the side effects on workers, she said. "Sometimes they don't look at the situation with the staff because they're too concerned with the customers."
"I feel some of the other staff, if they are giving 100 per cent customer focus before, it has changed," said the supervisor at a restaurant where a portion of the tips goes to management. "They feel bad and I understand that." She said restaurant contracts often include provisions for the extra income. "That's the promise: you're going to have your separate tip and service charge aside from your fixed salary, and if you arrive here the story is different."