UK restaurants could face prosecution over service charges

Trading standards authorities could prosecute restaurants that automatically add an optional or discretionary service charge to bills.

The claim comes after investigations by trading standards officers from seven London boroughs found all the 95 restaurants visited put a service charge on to the bill, even though it was said to be optional.

This contravenes the legislative code of practice governing the way prices are displayed, which could mean a maximum £5,000 fine for offenders.

Officers also found that customers were presented with credit card slips with the gratuity box left open in 50% of the restaurants, despite having also paid a service charge as part of the bill.

Sue Jones, head of Westminster Trading Standards, said the survey was commissioned in response to public complaints about both practices. The findings are to be put forward to the Department of Trade & Industry for inclusion in its Code of Practice for Price Indications, due for review next year.

While Jones denied that any prosecutions were planned, they could not be ruled out, she said: "The current code of practice does make it clear that optional service charges should not be put directly on the bill. We haven't any prosecutions planned but there's every possibility there will be."

One London pub company that didn't want to be named was investigated by trading standards officers before Christmas. The group was pulled up on the practice of leaving tip or gratuity spaces on customer bills "open", despite also adding a discretionary 12.5% service charge.

The key point to come out of this investigation was the contradiction between the wishes of the trading standards officers, namely that for the sake of transparency service charge should be incorporated into the food costs, and the Tronc.

Troncs allow operators to avoid paying national insurance on money that passes through it, and offers a tax break as well as a service to staff. In this case, trading standards officers admitted to knowing nothing about the tronc system and have advised that further discussion with central government would now be necessary.

Source: Caterer & Hotelkeeper magazine, 8 - 14 April 2004