Once again... the "service charge" is...

Bnewb/Lisa has asked me to make a post about the service charge that many businesses have on their bills. She has been getting many PMs and emails about an ongoing thread on TA. Apparently the information being posted is not exactly accurate. This is an often confused issue and we are addressing it again for our visitors to understand.

We have discussed this in detail in 2012, 2014 and 2017. I have some intimate knowledge on this as I have helped local businesses design their accounting programs. The service charge is an accounting line item that needs to be correctly applied or the business is in breach of the Jamaican labour laws.

Unlike the US, Jamaica does not allow for a "sub-minimum wage" to be paid to servers. There is no "tipped" or "non-tipped" employment category for Jamaican workers. The minimum wage applies to every worker.

When Jamaica began to be a serious tourist destination, the government sanctioned the "service charge". This is not a tip, per se, but an addition to the normal pay that all hourly employees share equally. Here is what I wrote in 2014:

The service charge is NOT anything the restaurant wants it to be. It is a line item on the business accounting and is shared among all hourly employees. That includes the servers, the cooks, the dishwashers, the groundskeepers, the maintenance folks, etc. It is illegal to have a service charge on the bill if it is not shared. The fine has been raised to discourage any misuse of these shared service charges to the employees. Unfortunately you were given wrong information.

And again what I wrote in 2012:

If your bill has a "service charge" then this is a shared tip for all the hourly employees, not a direct tip to your bartender or server. The Jamaican government enacted the service charge so that more Jamaicans benefit.

A service charge of 10% is added to the bill, then it is totaled from all receipts during that pay period, and then split between all hourly employees equally, from the bartender to the gardener to the housekeepers. That way, when a guest purchases something, more than just the server makes a bit of money.

For a simple example, lets say a server hands you a bill for us$100, with a $10 service charge added. The server will not get that $10 service charge directly. Lets suppose there are 10 employees total at the property who work the same amount of hours. At the end of the pay period, that $10 charge will be split between all 10 employees equally based on their hours worked. So while the server did not get the entire $10, they did receive $1 from it as did all the other employees.

The service charge is set at 10% so that it leaves room open for you to tip the server directly - and that tip is up to your discretion. You can leave an additional 5% that they will keep for themselves, or any additional amount that you choose.

It is often speculated that the employees never see the service charge. You may even hear that from the employees themselves. But this is simply not true. If a business has a service charge, then the business can be fined and even closed should they not share this with all their hourly employees. A server may say they never see the money, but they do see their percentage of that charge which is of course much smaller depending on the number of employees. For the example above, the server may feel they didnt get anything from it, because they never saw 90% of the charge. But they did receive their percentage on their paycheck.

I hope this clears up the issue a bit

I think the idea behind the service charge is good and I wished the USA did the same. I understand that my enjoyment of the experience at a restaurant goes far beyond what the waiter does and comes from the collective effort of the staff. Besides, I always tip 20% total (thus I add an additional 10% if I see the service charge on my bill), so the waiter still gets extra compared to the rest of the staff anyways. I feel bad for the waiter though if people use the service charge as an excuse not to more....

I will pass this info along to the newbies we have traveling with us in April. Thanks Rob

Although i see the service charge (i know what it is) I always add a tip when paying my bill. In some places any tips are shared as well . You can afford a large meal, and alcohol so don't try to save a penny when tipping.

So, if there is a 10% service charge added what is a fair percentage to leave a server. As everyone around the world tips differently I’m just wondering.

I would think it would be better to just add it to the total and don't show it on the final bill...… That way some won't interpet the tip already added in...….

Thank you for the clarifying information!

so, if a restaurant bill does not show a specific line item of "service charge" is is safe to assume none was charged? and if so, is the restaurant/bar/hotel out of compliance with labour laws?

How about cash and carry items? like beers or patties, etc. I'm not sitting, I'm not being served by a waitress, I may or may not give a few dollars tip (as I do at home with take-out food). I assume a service charge has been accounted for in price per item...

Just curious... not splitting hairs. I generally tend to tip waitstaff, and I do appreciate the fact that other people involved in the service process also receive a percentage of my bill. Want to ensure I'm well informed. Thanks!!!

The vast majority of all Jamaican businesses would never have a service charge. As with many countries, Jamaicans normally do not tip nor expect to get one.

Because of the growth of tourism, tipping entered the mix and began to pose some problems.

The American version of tipping can create a huge disparity in wages. To give a single server a 10 to 20% tip creates serious inequities, especially when everyone knows that many other workers contributed. This is why the concept of a service charge was created.

A service charge is not a mandatory practice, but a voluntary one.

Businesses are given the choice to enact the charge as a way to reward all workers during a busy period, such as the tourism high season. This increases the price of the final bill, but the increase goes directly to all the hourly employees.

You are still free to give your server a tip should you desire. Rest assured that your tip is greatly appreciated.

But a service charge allows the business to provide a steady wage year round, and at the same time give all the workers a "bonus" when times get busy.

It is noted with the prices on a restaurant menu or on your hotel's "fine print". It will then be shown on the bill and receipt along with the taxes.

thanks for clearing that up...i wasn't aware.