Christmas spending can really bite
Money seems to flow out of ones hands like water over the Christmas holiday period. There are work drinks, catching up with friends and meals out with the family, not to
mention presents and holidays to be paid for! And when money starts getting tight, restaurants and bars adding surcharges to their offerings can be extremely frustrating
and make it seem as if they are making a joke of you a little. Read on to find out when establishments are allowed to include surcharges, when they are not, and how much extra they are allowed to charge.
Under the idea of the “free market”, when you own a business you may charge whatever you like for your goods or services. The idea is that this will be balanced by customers simply not purchasing from you if you charge too much. There is a fine balance that is found between being cheap enough to be competitive, yet still making a profit. With the introduction of the Holidays Act 2003 which gives staff higher wages for working public holidays however, some businesses have started charging a surcharge to cover their costs for those specific days.
The Commerce Commission stated in 2013 that while they cannot stop businesses charging extra for certain days, they must be honest about their reasons for doing so. For example, a business must not use the Holidays Act 2003 as an excuse to charge extra for the Saturday or Sunday of Easter, as those are not public holidays (only the Friday and Monday are holidays). Similarly, it is misleading to impose a surcharge if your staff are casual staff, and so are not entitled to the extra wages. If a business is doing these things, they can potentially be charged under the Fair Trading Act for misleading consumers.
A 2013 survey by the Restaurant Association of New Zealand found that the practice of applying surcharges is gradually falling, from 56% applying a 15% surcharge in 2010 to 38% in 2013. It was thought that the reasons for this may include fear of customer backlash, and the practice of forecasting for the cost of opening on public holidays and building this into the yearly budget. The survey did find however that 80% of those surveyed had either no reaction, or a positive reaction, from customers regarding the surcharge. It seemed that generally, once the reasoning behind the surcharge was explained, customers were happy with the idea.
Hospitality New Zealand estimates the cost in wages of opening on a public holiday to be more like 28%, rather than the 15% routinely charged, but the Commerce Commission again warns businesses not to overcharge, as if it is found that they are profiting more than normal through the surcharge, this is unfair. If you feel that someone is charging an excessive surcharge for a public holiday, come and talk to us at community law Marlborough for free, confidential advice about where to direct your concerns.