NCL Gratuities/Service Charges & Cabin Steward

[Sam Ting]

46 minutes ago, erdoran said:

My take on the thread is positioning DISCRETIONARY charges as money going to employees—issue being that there’s a body of evidence that these DISCRETIONARY charges may not actually translate into additional compensation for employees, and may instead be a sneaky way for a company to charge more for a service than advertised as the actual price.

Agreed.  And apparently a lot of people not only fall for it but defend it. Lol. 

[rugerdog]

42 minutes ago, Sam Ting said:

Agreed.  And apparently a lot of people not only fall for it but defend it. Lol.

 

This.  x2

[erdoran]

3 hours ago, sjbdtz said:

 

 

But if the end-game is that the employees are being compensated adequately (at or beyond the minimum required), and sufficiently that they voluntarily return to do it again - then, so what?   

 

If you've ever run a business, you'll be familiar with the term fully-loaded, when referring to an employee.   There's the cost of the employee (what you pay them), and then there's the fully-loaded cost (pay, health contributions, employer taxes, retirement contributions / pension, desk, perks, etc.).   

 

If NCL is saying that the DSC is used to fund the fully-loaded costs of their employees, then it's quite possible that not 100% of it is salary, but some are the ancillary costs of maintaining those employees. 

 

At the end of the day, the company requires $X to operate and pay for staffing.  If the competitive market dictates that the sum be broken into component parts, and that uniting it all into a lump sum would put the company out of business due to being perceived as uncompetitive, then why not just let them go with the market?

 

 

 

I’m quite aware of the overhead for an employee with benefits.  All of our employers fund that, and I don’t think they add a discretionary uplift to the agreed-upon mandatory price of their products and services to fund my health insurance, vacation time, non-existent pension, etc. —that’s part of the HR cost of doing business.  I don’t expect our customers to have the CHOICE whether or not to contribute to my salary/overhead, that should be included in the cost of our products.

 

Knowing what I know now about DSC the only reason I’d pay it is the guilt from the cheerleaders here.  Salaries and benefits go against a company’s bottom line and shouldn’t be extorted from customers after they’ve made a purchase at an agreed-upon price by giving the evidently false impression that staff depends on them, dollar for dollar, for their paychecks.  

 

PS “perceived as uncompetitive”?  How about “perceived as using deceptive tactics to raise the price above the contracted price”?

Edited April 10, 2019 by erdoran

[sjbdtz]

31 minutes ago, erdoran said:

I’m quite aware of the overhead for an employee with benefits.  All of our employers fund that, and I don’t think they add a discretionary uplift to the agreed-upon mandatory price of their products and services to fund my health insurance, vacation time, non-existent pension, etc. —that’s part of the HR cost of doing business.  I don’t expect our customers to have the CHOICE whether or not to contribute to my salary/overhead, that should be included in the cost of our products.

 

Knowing what I know now about DSC the only reason I’d pay it is the guilt from the cheerleaders here.  Salaries and benefits go against a company’s bottom line and shouldn’t be extorted from customers after they’ve made a purchase at an agreed-upon price by giving the evidently false impression that staff depends on them, dollar for dollar, for their paychecks.  

 

PS “perceived as uncompetitive”?  How about “perceived as using deceptive tactics to raise the price above the contracted price”?

 

Do you also refuse to tip at restaurants?   Because restaurants use deceptively low prices on their menus to entice you to order, with the expectation that you will top-up the servers (and via tip-outs...the back-of-house staff) salaries through generally accepted tipping standards (15 -20% depending on where you live). 

 

The DSC is no different.   Cruising is an industry where historically the staff were tipped a "recommended" amount, by job-type by the customers, in white envelopes on the last day of the cruise.

 

When NCL brought in Freestyle where you had different servers, different venues, etc. on any given night - they automated that white envelope process through a Service Charge.

 

The net effect is the same generally accepted protocols  (the sum of the 'recommended' amounts = the DSC) applied automatically.

 

Why this is suddenly deceptive is baffling.  Especially since I've seen you on these boards for several years.

 

 

.

 

[luv2kroooz]

2 hours ago, sjbdtz said:

 

Do you also refuse to tip at restaurants?   Because restaurants use deceptively low prices on their menus to entice you to order, with the expectation that you will top-up the servers (and via tip-outs...the back-of-house staff) salaries through generally accepted tipping standards (15 -20% depending on where you live). 

 

The DSC is no different.   Cruising is an industry where historically the staff were tipped a "recommended" amount, by job-type by the customers, in white envelopes on the last day of the cruise.

 

When NCL brought in Freestyle where you had different servers, different venues, etc. on any given night - they automated that white envelope process through a Service Charge.

 

The net effect is the same generally accepted protocols  (the sum of the 'recommended' amounts = the DSC) applied automatically.

 

Why this is suddenly deceptive is baffling.  Especially since I've seen you on these boards for several years.

 

 

.

 

 

Irrespective of what NCL chooses to call it, it is a gratuity as it can be adjusted and is not mandatory.

 

It is deceptive because gratuities are intended to directly compensate an employee for services rendered to the customer. A gratuity is not intended to pay for things indirectly related to the delivery of the service such as employee uniforms, enrichment programs, or travel costs. Those costs can either be paid by the employer in the base salary and passed on to the consumer via a higher base fare or not. But the customer doesn't support those costs via gratuities.

 

Even with mandatory hotel service charges, you'll typically get daily bottled water or internet access, or local transportation in exchange for the charge. On NCL you get none of that and are told it goes to support "people behind the scenes". Wait, what??

 

The fact is daily gratuities have increased at levels far greater than inflation without a corresponding increase to service. Just do the math, the increases can't be going directly to the staff. It is a money grab by a very greedy corporation that has not been bashful about saying so. They know some people will pay whatever they say. They probably expect x% of the population to go along with it, and that cash falls right to the bottom line. Will they give any of it to their shareholders?

[sjbdtz]

9 hours ago, blcruising said:

 

Irrespective of what NCL chooses to call it, it is a gratuity as it can be adjusted and is not mandatory.

 

It is deceptive because gratuities are intended to directly compensate an employee for services rendered to the customer. A gratuity is not intended to pay for things indirectly related to the delivery of the service such as employee uniforms, enrichment programs, or travel costs. Those costs can either be paid by the employer in the base salary and passed on to the consumer via a higher base fare or not. But the customer doesn't support those costs via gratuities.

 

Even with mandatory hotel service charges, you'll typically get daily bottled water or internet access, or local transportation in exchange for the charge. On NCL you get none of that and are told it goes to support "people behind the scenes". Wait, what??

 

The fact is daily gratuities have increased at levels far greater than inflation without a corresponding increase to service. Just do the math, the increases can't be going directly to the staff. It is a money grab by a very greedy corporation that has not been bashful about saying so. They know some people will pay whatever they say. They probably expect x% of the population to go along with it, and that cash falls right to the bottom line. Will they give any of it to their shareholders?

 

 

Fine then.  If you want to use the legalese, and not all the other communications aspects of describing the thing,  then all of their cruises are deceptive too.   The contract does not require them to comply with any itinerary.   So all of those lovely descriptions of stops & port visits & shore excursions...all just wishful thinking.

 

Or, if you are an adult and realize that many places have a disconnect between what is legally allowable, and what is intended  (yes, your product is covered by a 1 year warranty.... which in the contract is defined as not including wear & tear (even if accelerated/unusual), not damage, and only defects caused during manufacture.   The intent is to convince you that you're protected, the contractual reality is that you probably aren't.)     In this case the FAQ, and other marketing does NOT describe the DSC as fully optional & removable, and therefore it remains a Service Charge and not a gratuity, and therefore can be used for the purposes for which it is described.

 

 

[luv2kroooz]

29 minutes ago, sjbdtz said:

 

 

Fine then.  If you want to use the legalese, and not all the other communications aspects of describing the thing,  then all of their cruises are deceptive too.   The contract does not require them to comply with any itinerary.   So all of those lovely descriptions of stops & port visits & shore excursions...all just wishful thinking.

 

Or, if you are an adult and realize that many places have a disconnect between what is legally allowable, and what is intended  (yes, your product is covered by a 1 year warranty.... which in the contract is defined as not including wear & tear (even if accelerated/unusual), not damage, and only defects caused during manufacture.   The intent is to convince you that you're protected, the contractual reality is that you probably aren't.)     In this case the FAQ, and other marketing does NOT describe the DSC as fully optional & removable, and therefore it remains a Service Charge and not a gratuity, and therefore can be used for the purposes for which it is described.

 

 

Absolutely agree, the cruise line contracts are some of the most anti-consumer. They could take you to sea for seven days and fulfill their duty. Their onboard employees tell you how safe and wonderful their tour operators are, but then disclaim any responsibility for them in the fine print. I've even been on tours where the operator passed out a liability waiver form and expected us to sign off, which of course we didn't. Someone has a responsibility to operate the tour in a safe manner. If not NCL and if not the tour operator, then who?

 

Take a look at how inconsistent NCL describes their own charge. It is no wonder educated people are skeptical and confused.

 

 

Here is how NCL described the daily fee in an email when they increased it in April...it is a reward for delivering service....a gratuity.

 

 Norwegian Cruise Line is making a nominal adjustment to its daily service charges, effective April 1, 2019. Norwegian's discretionary daily service charges make it easy for guests to provide gratuities to the onboard staff dedicated to delivering superior guest service throughout the cruise.  

 

It is described very differently on the website faq...it is described as compensation in the first paragraph, and then they say if you have bad service you can adjust it.

 

What is the onboard service charge?

Why is there a service charge?
The reason there's a fixed service charge is an important one: Our Crew (as are the crew from other lines) is encouraged to work together as a team. Staff members including complimentary restaurant staff, stateroom stewards and behind-the-scenes support staff are compensated by a combination of salary and incentive programs that your service charge supports. How much is the charge? Onboard Service Charges are additional.

 

If there is a service issue can the service charges be adjusted on board?
Guest satisfaction is the highest priority at Norwegian Cruise Line. We have structured a guest satisfaction program designed to handle any concerns about service or on-board product quickly and efficiently. However, in the event a service issue should arise during your cruise please let our on-board guest services desk staff know right away, so that we can address these in a timely manner. It is our goal to reach a satisfactory solution to any issue when it happens and make sure our guests can focus on enjoying their cruise. Should your concerns not be met with satisfaction you can adjust the charges.

 

Edited April 11, 2019 by blcruising

[Sam Ting]

1 hour ago, sjbdtz said:

 

 

Fine then.  If you want to use the legalese, and not all the other communications aspects of describing the thing,  then all of their cruises are deceptive too.   The contract does not require them to comply with any itinerary.   So all of those lovely descriptions of stops & port visits & shore excursions...all just wishful thinking.

 

Or, if you are an adult and realize that many places have a disconnect between what is legally allowable, and what is intended  (yes, your product is covered by a 1 year warranty.... which in the contract is defined as not including wear & tear (even if accelerated/unusual), not damage, and only defects caused during manufacture.   The intent is to convince you that you're protected, the contractual reality is that you probably aren't.)     In this case the FAQ, and other marketing does NOT describe the DSC as fully optional & removable, and therefore it remains a Service Charge and not a gratuity, and therefore can be used for the purposes for which it is described.

 

 

It’s much more complicated than that. 

[sjbdtz]

3 minutes ago, Sam Ting said:

It’s much more complicated than that. 

 

In the sense that you DO want the itinerary, and you DON'T want to pay the DSC?????

 

Or some other way?

 

 

 

 

[fshagan]

19 hours ago, sjbdtz said:

If NCL is saying that the DSC is used to fund the fully-loaded costs of their employees, then it's quite possible that not 100% of it is salary, but some are the ancillary costs of maintaining those employees. 

 

I totally agree with your approach on this issue.

 

NCL has said that they use the service charge to both compensate and support incentive programs for their employees. That's sufficient for me to believe it goes to the employee in some fashion. I don't care what percentage of their costs are wages, benefits, or whatever the "incentive programs" are. As long as I know the employees are not being exploited, I simply choose my vacations by price and itinerary.

[fshagan]

12 hours ago, blcruising said:

 

Irrespective of what NCL chooses to call it, it is a gratuity as it can be adjusted and is not mandatory.

 

 

Not true. If we were talking about US tax law, it would NOT be a gratuity, but a "service charge". And that is exactly what NCL calls it, a daily service charge. It is a "service charge" because it is given to the company and the company decides on the distribution. That's the defining point here. NCL is really customer friendly because they allow you to adjust or eliminate it, but they don't have to do that. The third and fourth bullet point means that the NCL discretionary "daily service charge" is not a gratuity or tip, but a service charge:

 

From the IRS at https://www.irs.gov/newsroom/employer-reminder-reporting-tips-versus-service-charges-key-differences-between-categories-affect-employees-tax-reporting:

 

Four factors are used to determine whether a payment qualifies as a tip. Normally, all four must apply. To be a tip:

 

•     The payment must be made free from compulsion;
•     The customer must have the unrestricted right to determine the amount;
•     The payment should not be the subject of negotiations or dictated by employer policy; and
•     Generally, the customer has the right to determine who receives the payment.

If any one of these doesn’t apply, the payment is likely a service charge.

 

 

[luv2kroooz]

32 minutes ago, fshagan said:

 

Not true. If we were talking about US tax law, it would NOT be a gratuity, but a "service charge". And that is exactly what NCL calls it, a daily service charge. It is a "service charge" because it is given to the company and the company decides on the distribution. That's the defining point here. NCL is really customer friendly because they allow you to adjust or eliminate it, but they don't have to do that. The third and fourth bullet point means that the NCL discretionary "daily service charge" is not a gratuity or tip, but a service charge:

 

From the IRS at https://www.irs.gov/newsroom/employer-reminder-reporting-tips-versus-service-charges-key-differences-between-categories-affect-employees-tax-reporting:

 

 

 

Couple things....I don't think crew are governed by US law.

 

As long as it is discretionary and can be adjusted, it can not be a service charge.

 

 Norwegian Cruise Line is making a nominal adjustment to its daily service charges, effective April 1, 2019. Norwegian's discretionary daily service charges make it easy for guests to provide gratuities to the onboard staff dedicated to delivering superior guest service throughout the cruise.  

Unless or until NCL mandates the daily fee and does not allow it to be adjusted, it can't be a service charge. They aren't going to mandate it anytime soon as I believe it would adversely impact their business. So, until that time, I predict they'll continue to refer to it as a service charge in their materials, even though it is treated as a gratuity in practice. And we'll continue to have spirited debate about it here on cruisecritic.

Thank you.

Edited April 11, 2019 by blcruising

[erdoran]

18 hours ago, sjbdtz said:

 

Do you also refuse to tip at restaurants?   Because restaurants use deceptively low prices on their menus to entice you to order, with the expectation that you will top-up the servers (and via tip-outs...the back-of-house staff) salaries through generally accepted tipping standards (15 -20% depending on where you live). 

 

The DSC is no different.   Cruising is an industry where historically the staff were tipped a "recommended" amount, by job-type by the customers, in white envelopes on the last day of the cruise.

 

When NCL brought in Freestyle where you had different servers, different venues, etc. on any given night - they automated that white envelope process through a Service Charge.

 

The net effect is the same generally accepted protocols  (the sum of the 'recommended' amounts = the DSC) applied automatically.

 

Why this is suddenly deceptive is baffling.  Especially since I've seen you on these boards for several years.

 

 

.

 

When I tip at restaurants, the server and whoever they tip out KEEP 100% OF MY TIP - or that is the common belief.  IF the restaurant adds on an 18% or 20% autograt to "parties of 6 or more" the understanding is that is the same as the tip I leave at the table that goes to my server and DIRECTLY, 100% to other employees.  It doesn't go to the restaurant to be used in some vague fashion that may or may not end up 100% in employees' pockets, over and above their base pay.  

 

And I've always questioned the DSC and advocated setting fares at the level where NCL can pay their employees the "proper wage" directly, rather than guilting pax into paying it much of the time I've been here, once I got past my initial attempt at conformity.  Just judging by the popcorn and flames that start flying every time this topic comes up shows how controversial DSC, 20% autograts on UBP, etc are.  

 

Let me be clear, I pay the DSC, I tip over and above the DSC, it's not even about the $$ out of my pocket, it's more a matter of principle for me, because I prefer transparency and clarity in business dealings, especially when I'm asked (and then guilted!!) into handing over more money, and I don't have the confidence I'm paying for what I want to - in this case, showing appreciation to crew.  Now I know someone will say "but then give them tips on top of DSC" - but isn't the purpose of DSC to be INSTEAD of tipping everyone?

Edited April 11, 2019 by erdoran

[Sam Ting]

4 hours ago, sjbdtz said:

 

In the sense that you DO want the itinerary, and you DON'T want to pay the DSC?????

 

Or some other way?

 

 

 

 

In the sense that while they can try and excerise their rights under the contract, they still have to retain customers.   If they routinely changed the vessel and ports then they would soon be out of customers.  

 

We on in the other hand can routinely remove the DSC (USA bookings anyway) and they would have no recourse as it is allowed for in the contract. (Which they themselves wrote)

[fshagan]

14 hours ago, blcruising said:

Couple things....I don't think crew are governed by US law.

 

As long as it is discretionary and can be adjusted, it can not be a service charge.

 

US law absolutely governs the financial concerns of NCLH. They are a US corporation, submitting a corporate tax return to the IRS, and submitting all the required paperwork with the SEC including quarterly and year end financial reports. The flag flying on the back of the ship does govern the crew, but not the financial affairs of the corporation processing your credit card payments in Miami.

 

The IRS defines what a tip/gratuity is. Unless the payment meets ALL four examples I gave above, it isn't a tip. It isn't a matter of defining what a service charge is; it's a matter of what a tip is. You can call it an eggplant if you want, but it's not a tip.

 

NCL calls it a "service charge". The IRS says it's not a tip. What should we call it? I vote for "service charge".

 

 

[CruiseGal999]

On 4/1/2019 at 12:28 PM, chengkp75 said:

This poor girl should have been reported, as this is in direct violation of company policy, and something the staff are told will be a terminating offence when they first sign on the ship.

 

People, how can you possibly, knowingly, deliberately report someone KNOWING FULL WELL the result will be in that person losing their job?  Have the backbone to politely say "that is inappropriate and not appreciated".  

[luv2kroooz]

4 hours ago, fshagan said:

 

US law absolutely governs the financial concerns of NCLH. They are a US corporation, submitting a corporate tax return to the IRS, and submitting all the required paperwork with the SEC including quarterly and year end financial reports. The flag flying on the back of the ship does govern the crew, but not the financial affairs of the corporation processing your credit card payments in Miami.

 

The IRS defines what a tip/gratuity is. Unless the payment meets ALL four examples I gave above, it isn't a tip. It isn't a matter of defining what a service charge is; it's a matter of what a tip is. You can call it an eggplant if you want, but it's not a tip.

 

NCL calls it a "service charge". The IRS says it's not a tip. What should we call it? I vote for "service charge".

 

 

Totally agree about USLaw and NCLH. My post stated crew was not governed by US Tax Law.

 

I'm cool with calling it a service charge, but treating it like a gratuity, which is what it is until NCL makes the charge mandatory, which isn't going to happen anytime soon.

 

I will continue to treat it as a discretionary gratuity as allowed by NCL terms and conditions by adjusting it to a level that more closely resembles the value I receive for the solid service provided by the hardworking crew. 

 

You can treat it like a service charge and pay whatever amount NCL tells you to pay. If you pay a little more, you could make up for the amount of my reduction and NCL ends up in the same place, economically.

[Sam Ting]

7 hours ago, CruiseGal999 said:

 

People, how can you possibly, knowingly, deliberately report someone KNOWING FULL WELL the result will be in that person losing their job?  Have the backbone to politely say "that is inappropriate and not appreciated".  

Agreed.  

[fshagan]

8 hours ago, CruiseGal999 said:

 

People, how can you possibly, knowingly, deliberately report someone KNOWING FULL WELL the result will be in that person losing their job?  Have the backbone to politely say "that is inappropriate and not appreciated".  

 

She is stealing, and should lose her job. If she steals from the company, how can she be trusted in your cabin when you aren't there?

 

[Sam Ting]

9 minutes ago, fshagan said:

 

She is stealing, and should lose her job. If she steals from the company, how can she be trusted in your cabin when you aren't there?

 

How is that stealing?  Could she be arrested and convicted of a crime?  

[rugerdog]

This has been a very interesting and informative thread.  I appreciate all of the input, thoughts, facts and opinions.  

 

I am sailing on NCL in a couple of weeks, and what I have learned here will be helpful.  Thank you for taking the time to share on this ever volatile subject.

[erdoran]

On 4/12/2019 at 12:53 AM, CruiseGal999 said:

 

People, how can you possibly, knowingly, deliberately report someone KNOWING FULL WELL the result will be in that person losing their job?  Have the backbone to politely say "that is inappropriate and not appreciated".  

I hate the thought of “getting someone fired” but the flip side is holding people responsible for their behavior.  If an objective statement of fact with no judgment passed is shared with the hotel manager, if the person has done nothing wrong then there is no harm done.  If the behavior is inappropriate and unacceptable, then there should be consequences.  An objective statement of fact is very different from subjective “I didn’t like the way she cleaned my room”.

 

Stealing? (Said upthread). If you are of the school that believes the DSC shows up in crew members’ paychecks then YES, that is absolutely stealing everyone else’s share and keeping it for herself.

 

A lot of times when someone reports bad behavior to whoever the “authorities” are, they are considered the bad guy, rather than the person who did something wrong.  What’s wrong with this picture?

[NLH Arizona]

On 4/11/2019 at 9:53 PM, CruiseGal999 said:

 

People, how can you possibly, knowingly, deliberately report someone KNOWING FULL WELL the result will be in that person losing their job?  Have the backbone to politely say "that is inappropriate and not appreciated".  

If someone ask me to deduct the DSC and give it to them, I would report them no matter what would happen to them, because I don't think the company or the other employees would want to work with someone who isn't a team player and only thinks of themself with regard to the DSC