Service charge reaches tipping point

Service charge reaches tipping point

One of the world's forever-favourite words must be "Friday". For many, this evening and the ensuing weekend will be a time to dine, wine or even indulge oneself with a spa, massage or any of the other pampering services that Thailand is famous for. Let's say, whatever you end up doing, you have a good time. Good food or excellent service from hospitable, dedicated staff, for example. What are your habits when the tab arrives?

Seeing a 10% service charge included on the bill (not to mention another additional charge of 7% for VAT) you think the service charge levy should be enough to reward the hospitable and hard-working employee.

Only some customers will leave the tip directly for the staff member as an individual reward - just to tell them how proficient their service was. The "hand tip" varies - coins, 20 baht, 100 baht or maybe a bit more. Usually, the sum is much less than the 10% service charge. Thais are awkward with tipping despite being known as among the most hospitable people in the world. Tipping is a complex social etiquette as it borders on generosity, meritocracy and financial necessity for those on the receiving end.

In some countries, such as the US, service-providing workers, say waiters - many of them students, and if you dine in big cities like New York many are future actresses or musicians waiting to be discovered - count on tips to pay their bills.

Apart from paying the 10-15% service charge, it is social custom for each customer to chip in money for a tip to equal the service charge. In Japan and Singapore, waiters and waitresses will say words that make many smile: "Thank you, but I will not receive tips."

In Thailand, paying tips is based on generosity, quality of service plus misunderstanding about the service charge. Contrary to our belief, money from the service charge levy belongs to the business owners who will later share it with their employees - from chefs, cleaners to all staff in general. Indeed, many business owners exclude service charges to cover operational costs - to pay for equipment broken by staff, for example.

"There are no official regulations forcing employers to give all service charges to employees. Usually, employers and employees will negotiate an allocation quota like 40:60 or depend on terms of agreement," said Associate Professor Lae Dilokvidhyarat, an expert on labour at the Faculty of Economics at Chulalongkorn University.

Service charge in Thailand will become more complex and a hot topic of debate between business owners and workers when the Ministry of Labour imposes new regulations on calculating service charge next month. The new regulation will permit owners of businesses including those in the service industry such as restaurants and hotels to use money from the service charge to pay staff salaries.

One of the reasons for this policy is to help service-industry operators in big cities such as Phuket and Bangkok to meet the Puea Thai Party's populist policy to pay a 300-baht minimum daily wage to workers in certain towns. Instead of digging deep into their net income pocket, employers can use money from the service charge to pay for the increase in salary. Getting confused? "It is just an act of financial alchemy. In practice, the authority just allows employers to use welfare money which belongs to employees to pay wages that also belong to workers. On the surface, it appears that service charge money will be channelled to workers directly. But it is not real accumulation," according to Lae. So what should we do? The exact question should be "Is it our problem?" At the end of the day, we are customers and we are supposed to have a good time, foot our bill, then leave. Right?

Finally, tabs will arrive and we will pay service charge for what we receive and what we think is deserved. Food, wine, good service, dubious labour welfare standards, not to mention the populist policy on the 300-baht minimum wage.

Leave the place or leave the tip, the matter of to-tip-or-not-to-tip in the Land of Smiles (and good service), is more than meets the eye.


Anchalee Kongrut is a features writer for the Bangkok Post.

Anchalee Kongrut

Editorial pages editor

Anchalee Kongrut is Bangkok Post's editorial pages editor.

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