The Delhi High Court has ordered the Federation of Hotel and Restaurant Association of India (FHRAI) to use the term 'staff contribution' instead of 'service charge' in restaurants. The court also ruled that the amount charged as staff contribution should not exceed 10% of the bill. Nearly 3,300 hotels and restaurants associated with FHRAI must specify on their menu cards that tips need not be given after staff contribution is paid.
The interim order does not apply to restaurants associated with the National Restaurants Association of India (NRAI). The court passed this order while dealing with a plea filed by FHRAI and NRAI challenging guidelines issued by the Central Consumer Protection Authority (CCPA) on July 4, 2022, which stated that hotels and restaurants should not add service charge automatically or by default to food bills. These guidelines were previously stayed by the High Court.
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