Mandatory Service Charge
A compulsory charge added to a customer bill, which must be treated transparently and not confused with a voluntary tip.
A mandatory service charge can easily be misunderstood by both customers and staff. If the business does not clearly explain whether it is retained by the business or distributed to workers, it may create disputes and damage trust.
Frequently Asked Questions
The employer's policy on tips, gratuities and mandatory charges should be included in the core information given to workers. This is particularly important where service charges are a regular feature of the business.
How a mandatory service charge is treated depends on how it is presented and the employer's policy. Hospitality businesses should avoid vague wording and make the treatment of service charges clear to workers and customers.
No. A voluntary tip or gratuity is different from a mandatory service charge added to a bill. The business should be clear with customers and staff about how each type of payment is treated.