Service charge and gratuities

[SeaShark]

The daily service charge is a gratuity. It's been explained time and time again on these boards by people in the know (BruceMuzz comes to mind). Different lines use different terms - tips, gratuities, daily service charge, hotel service charge, etc. But it is all still a gratuity for tax purposes. If the daily service charge couldn't be removed by the passenger, it would not be a gratuity. But it can, so it is.

 

 

 

It is only mandatory in the way it gets charged to your account on board. You can remove it after the cruise though. So technically, no, it is not mandatory.

 

That is absolutely incorrect. If the person paying has no say on who the recipient of the money is, then it is a service charge (paid to the company to be parted out solely based on the company's judgment) and not a gratuity (given directly to a specific service provider by the payer).

[sparks1093]

Why wouldn't you? How about the other side...why would you?

 

 

I mean an apple provides nourishment.

I put the apple in my mouth.

I bite off a portion of the apple.

I chew and swallow the apple.

My body digests the apple taking what it needs and expelling waste.

 

I can also make all of the above statements for a steak.

 

 

And while the steak and the apple serve the same function (as food), seeing them as the same is still not correct...one is still a fruit and the other is still a piece of meat.

 

It is easy to see things as the same when you only consider the similarities, it is the differences you aren't taking into account that matter.

 

 

I mean, seriously, if they were the same, then why wouldn't NCL, the IRS, and a ton of other businesses just all just use one common definition and term?? Why does NCL have one FAQ on Gratuities and another on Service Charges? Why doesn't the FAQ on Service Charges just say "Service Charges are the exact same thing as Gratuities. Please see the FAQ on Gratuities for further information."??

 

NCL has two sections because people know what gratuities are, but are not familiar with service charges. NCL uses the service charge model only because it works better than anything else for paying the frontline employees under the Freestyle concept. I don't see enough difference between the service charge model versus the gratuity model used by other cruise lines.

 

DW and I go to a concert venue over in New Hampshire several times a year. Every ticket we buy includes a service charge in addition to the ticket price and taxes. I can't change the amount. I can't refuse to pay the amount. To me that is a true service charge and the fact that NCL does allow passengers to adjust it makes their "service charge" different from any other "service charge" I have to pay.

[sparks1093]

That is absolutely incorrect. If the person paying has no say on who the recipient of the money is, then it is a service charge (paid to the company to be parted out solely based on the company's judgment) and not a gratuity (given directly to a specific service provider by the payer).

 

I have no say in who receives the gratuity that I pay on CCL (yes, they do provide a breakdown of how it is distributed but I cannot in anyway change that distribution).

[SeaShark]

I have no say in who receives the gratuity that I pay on CCL (yes, they do provide a breakdown of how it is distributed but I cannot in anyway change that distribution).

Yeah...that is why all 4 conditions must be met for it to be a gratuity. It isn't simply a matter of the way some people choose to view it.

[Cruzaholic41]

That is absolutely incorrect. If the person paying has no say on who the recipient of the money is, then it is a service charge (paid to the company to be parted out solely based on the company's judgment) and not a gratuity (given directly to a specific service provider by the payer).

 

Sorry, but you are not correct. For the purpose of staff income, the daily service charge is termed a gratuity to avoid additional fees from their perspective governments. I am a former partner of a large Miami cruise travel firm and the way it was explained to us at a CLIA convention from all the major cruise players was - using the term "service charge" and adding them automatically to passengers accounts was a method to cut down on passengers stiffing the crew. Remember how empty the dining room was on the final night? When the crew doesn't meet a minimum income from tips, the cruise line has to make it up in salary.

[SeaShark]

Sorry, but you are not correct. For the purpose of staff income, the daily service charge is termed a gratuity to avoid additional fees from their perspective governments. I am a former partner of a large Miami cruise travel firm and the way it was explained to us at a CLIA convention from all the major cruise players was - using the term "service charge" and adding them automatically to passengers accounts was a method to cut down on passengers stiffing the crew. Remember how empty the dining room was on the final night? When the crew doesn't meet a minimum income from tips, the cruise line has to make it up in salary.

This discussion already has a number of side tpoics. No need for us to go down yet another side path.

[navybankerteacher]

Of course I can live with it, I'm just passing time as I recover from surgery;). In both cases the money is used to pay the frontline crew and in both cases the passenger has the ability to adjust the amount if they wish to, so why wouldn't I see them as functionally the same since they serve the same function?

 

They do NOT serve the same function. A strictly defined service charge which is used to pay staff wages will result in the staff having to treat the income as wages. A gratuity is in many jurisdictions not taxed while wages are.

 

Since putting net money in the staffs' pockets is the point of the functions, the different outcome means that the functions are not the same.

 

To argue otherwise is comparable to saying that tax-free interest on municipal bonds is the same as taxable income on corporate bonds. There is a significant difference to the person most involved: the recipient.

[sparks1093]

Yeah...that is why all 4 conditions must be met for it to be a gratuity. It isn't simply a matter of the way some people choose to view it.

 

As a practical matter one has no control over what happens to a tip they leave in a land based restaurant either- if the staff pools tips you cannot say to your server "I want you to retain 100% of this tip because you earned it" since the server is bound to observe the rules of the establishment.

 

Fact is in a shipboard environment you have a mixing of the two systems on pretty much any line that you sail with where what the passenger pays resembles a service charge in some respects and in other respects resembles gratuities. The bottom line (to me) is that this is how the people that serve me and mine get paid for their service, call it whatever you will.

[sparks1093]

They do NOT serve the same function. A strictly defined service charge which is used to pay staff wages will result in the staff having to treat the income as wages. A gratuity is in many jurisdictions not taxed while wages are.

 

Since putting net money in the staffs' pockets is the point of the functions, the different outcome means that the functions are not the same.

 

To argue otherwise is comparable to saying that tax-free interest on municipal bonds is the same as taxable income on corporate bonds. There is a significant difference to the person most involved: the recipient.

 

I am of course addressing this strictly from a passenger's point of view. There may or may not be a benefit to the crew depending on what it's called but that is not my concern.

[SeaShark]

As a practical matter one has no control over what happens to a tip they leave in a land based restaurant either- if the staff pools tips you cannot say to your server "I want you to retain 100% of this tip because you earned it" since the server is bound to observe the rules of the establishment.

 

Fact is in a shipboard environment you have a mixing of the two systems on pretty much any line that you sail with where what the passenger pays resembles a service charge in some respects and in other respects resembles gratuities. The bottom line (to me) is that this is how the people that serve me and mine get paid for their service, call it whatever you will.

Duh...you only control who the tip goes to...you never have control over what the recipient does with it...including whether or not they share their tip with others.

 

However, you never control a service charge. It always goes to the company who then has 100% control over it from that point on. Heck, they can even give it to people who didn't serve you at all.

[sparks1093]

Duh...you only control who the tip goes to...you never have control over what the recipient does with it...including whether or not they share their tip with others.

 

However, you never control a service charge. It always goes to the company who then has 100% control over it from that point on. Heck, they can even give it to people who didn't serve you at all.

 

LOL, if I can't control what the recipient does with it than I have no control over who the tip goes to (which is one of the reasons that I don't really worry about it once I've done my part by leaving the tip, paying the service charge or paying the automatic gratuities). Your statement about controlling a service charge also applies to gratuities levied by other cruise lines since the passenger has no control over who gets it. I suspect that on CCL the gratuities are pooled and paid out according to seniority etc. so wouldn't be surprised a bit to find out that people that didn't serve me actually received a portion of the gratuities that I paid.

 

I have the same amount of control over the service charge as I do the gratuities on any other line- I can adjust them or remove them if I desire to, even if I cannot control specifically which crew member gets what (unless of course I hand it directly to the crew member but what they do with it after that is out of my control).

[cruzsnooze]

Can someone tell me if service charges and gratuities are one and the same thing or different.

 

They are the same. They can be adjusted to what you decide you want to be charged at guest services, although the procedure has changed. I had them removed and used cash at each meal and for cabin steward. I found the service much much much better then when I had left the service charge intact. At Moderno where i had breakfast every morning and some lunches they sure seemed to remember me. I also ate twice at O'Sheehans and they gave me great service. Cash is king IMHO.

Edited June 23, 2016 by cruzsnooze

[IrieBajan54]

OP, they are one and the same. They are applied automatically. When aboard the ship, your bills are paid so no need to worry about additional tipping. NCL alleviates the cruiser of those worries.

[LEAJO]

Thank you everyone for your input