The TCIG has commissioned a Service Charge Review Committee comprising members from both the private and public sectors to examine and collate information received from owner, worker and employer groups operating within the hospitality industry on the management and distribution practices regarding service charges.
The call for information will initially focus on the hospitality sector, a very important part of the economy, as the existing Service Charge Ordinance prescribes operational parameters solely for that sector.
Currently there is a legal requirement for any entity that levies a service charge to hold a register of such payments collected during the month and to distribute the amounts collected in equal shares or using a formula approved by the Minister for Finance to all employees. Most importantly, the legislation obtains that not less than 60% of the total service charges paid by customers or guests is payable to the employees of the collecting establishment.
During the months of July and August 2016 a survey will be publicly distributed to obtain anonymous feedback on industry practices. The Service Charge Review Committee also intends to conduct interviews of a representative sample of stakeholders in the industry to gather a wide range of open-ended, qualitative data. Information gathered will be held in the strictest confidence. It will be analysed, providing the Government with empirical findings on industry norms, and any necessary intervention that may be required to improve the management and transparency of these payments.
“Service Charge” is defined in the Service Charges (Hotels and Restaurants) Ordinance as “any amount of money charged over and above the price of accommodation in a hotel, or the selling price of a meal or intoxicating liquor or beverage purchased by a customer, for service to a guest or customer in a hotel or restaurant, but does not include any tax required to be paid under any Ordinance.”
While the Ordinance does not specify a rate, most establishments levy the Service Charge at 10%.
The Government is appealing to the public to participate in this fact finding exercise; moreover, to practitioners within the hospitality sector to whom the service charge directly relates.
Consultations close on August 31, 2016.
