Friday, February 3, 2023

Nepalese Supreme Court's Decision To Remove Service Charge Good or Bad?


Recently, the Nepalese Supreme Court made a landmark decision to remove service charges from the hospitality industry in Nepal. This has caused a great deal of controversy among those in the industry, with many people divided over whether it is a good or bad decision.

On the one hand, some people argue that removing service charges is a positive step for customers. They say that it will lead to more transparent pricing and give customers more control over how much they pay for their meals. This, in turn, could lead to a better dining experience and increased customer satisfaction.

However, on the other hand, there are those who argue that removing service charges will have a negative impact on the industry. They say that the service charges were an important source of income for workers in the hospitality sector, and that the removal of these charges will mean that they will be paid less. This could lead to a decline in the quality of service, as workers will be less motivated to provide excellent service if they are not being fairly compensated.

In my opinion, the removal of service charges is a double-edged sword. On one hand, it will give customers more control over how much they pay for their meals, and this is definitely a good thing. On the other hand, it will mean that workers in the hospitality sector will be paid less, and this could have a negative impact on the quality of service.

In the end, the impact of the Nepalese Supreme Court's decision to remove service charges will depend on how the industry adapts to the change. If the industry can find alternative ways to compensate workers and maintain high levels of service, then the removal of service charges could end up being a positive development. However, if the industry is unable to do this, then the decision could have a negative impact on the quality of service and the workers in the industry.

The Supreme Court's ruling last week that hotels and restaurants cannot collect a 10% service charge from customers has led to confusion and uncertainty in the tourism industry. Consumers are hoping that the decision will make services more affordable, but it seems unlikely. Workers in the sector don't want to give up the service charge, while business owners don't want to pay more to their employees, which means that prices are likely to stay the same or even increase. In addition to the 10% service fee, customers also used to pay a 13% VAT, which added up to a 24% increase in their bill. Now, customers will only pay a 13% tax.

Some business owners are considering increasing menu prices to make up for the loss of the service fee, while others are considering raising workers' salaries to compensate. However, many businesses are struggling to stay afloat due to the COVID-19 pandemic and can't afford to take on more financial burden. The situation is complicated by the fact that the tourism sector has been in loss for three years, making it difficult for business owners to find a solution that works for everyone.

According to the Labor Act 2074 Section 87 (3), the tourism sector used to allocate 71% of the service fee to workers and 24% to employers for breakage and operational costs. The remaining 5% was divided between employers' organizations and trade unions. Service charges were a crucial source of income for workers and employers, so removing them will have a significant impact on the industry.

It's not clear yet how the ruling will affect the tourism industry, but one thing is certain: there will be challenges and disagreements as everyone tries to adjust to the new reality.

Why all of a sudden I'm writing this article over here. Its because, ITS FRIGGING 2 AM in the morning and I just finished making some necessary changes on the PMS of my workplace here at Chandragiri Hills. No more service charge over here at Chandragiri Hills now.

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