Tips can disappear due to service charge in Hungary
“We want the workers’ wages to increase legally. As the service charge is exclusively the employees’ due, there is no further need of tips, and it will disappear if the submission will be accepted” – Zsuzsa Várnai told mno.hu, who is the managing president of the Trade Union of Hotel, Catering and Tourism, about the recently created submission on the compulsory service charge.
The Hungarian Hotel and Restaurant Association (MSZÉSZ) proposes the introduction of compulsory service charge, the suggested amount is 8-15 per cent. According to the submission, the distribution of this amount will be determined by the owner or operator, by also asking the opinion of the employees. It is important to draw the guests’ attention to the charges to be paid, the amount has to appear on the menu and the bill, as it is legally regulated at present.
The managing president of the Trade Union has also confirmed the fact that they want the employees to get the total amount of this additional money. Since this is not the income of the company but the income of the employees. The specialist also said that, today, guests tend to pay by card, by which they cannot give tips in most of the places, but the new system would solve this problem as well. She emphasised that in 50 per cent of the cases the owner simply takes the tips away from the workers, perhaps giving some of it back, but usually taking it as profit. However, they could not do it in the case of the service charge, as it would mean a guaranteed income for the staff. Last week, the Trade Union sent its supportive letter about the submission to the Hungarian Tourism Agency.
According to László Könnyid, president of MSZÉSZ, the number of restaurants already applying service charge varies from region to region, but this number is higher in the capital than in the country. He added that they do not expect more income from the service charge, as its only purpose is to keep the employees and make the profession more popular. He thinks it would have some beneficial results, so the budget would also get some additional money.
The president noted that tips and service charge are not the same, although guests tend to believe so. He emphasised that tips are taxable, more precisely, it should be so, but only about a hundred employees return them currently on a yearly basis. As he mentioned, if they returned them, they would pay much more taxes than what they have to pay after the service charge. He created the system of service charge in 2005 because of this, but only as an optional choice. According to László Könnyid, this is a transparent and controllable structure, which is part of the tax system, and at the end the employees are the ones who get it. In contrast with the tips, it does not depend on the owner’s good or bad intent.
According to the Hungarian Central Statistical Office, the average wage of the employees working in the catering industry does not reach gross 500 EUR. However, employees being asked by mno.hu said this wage-increase by a few per cents is far from being enough, they could earn three times the money in Austria in the same position. Some people visiting restaurants regularly also said that they have often felt they had been swindled, because they noticed only later that the service charge had been hidden on the bill, and they had already given tips. None of the asked people agrees with this possible new system, because they like to give extra money in case of being satisfied with the serving.
Reduction of VAT is more needed
Népszava has asked some restaurant-keepers at Lake Balaton, who all disagree with the submission. According to Henrik Hoffman, president of Balaton Tourism Association and hotel owner, the compulsory service charge would be nothing else but a single compulsory raising of prices. He thinks the further reduction of VAT would be a better solution.
The VAT of the catering industry decreased to 18 per cent this year, while it will be further decreased to 5 per cent next year, and according to the expert, the rise of the wages has already begun in the sector. “Next year we take an even bigger step forward, we may reach 70 per cent of the wages people get in the catering industry in Austria. This can be the psychological boundary which perhaps will make more and more people stay at home and not work abroad” the expert told Népszava.