Money

It's Still Illegal For Restaurants To Quote A Sunday Surcharge

The Christmas break is quickly approaching, there are a stack of public holidays during that time, and the odds are good that you’ll eat out more often than usual during that period. Remember this: it’s illegal for restaurants and cafes to display a message saying something like ’10% surcharge on Sundays and public holidays’. They can charge more on given days, but they need to display the total price of each item on the menu.

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While I still encounter this message quite regularly on menus, displaying such a claim leaves the establishment open to being prosecuted. That has been the case since mid-2009, when the Australian Competition and Consumer Commission (ACCC) introduced laws around component pricing. Those laws meant that any promotion or advertising for a service had to prominently display the total price, not just elements of it. That included restaurant menus: if you had to pay 10 per cent extra just to cover public holiday costs, the restaurant needed a separate menu indicating those prices.

The ACCC left the laws in place for more than a year in order to give food establishments time to adjust, then began busting restaurants which consistently refused to play by the rules. While some restaurant operators grumbled about the extra cost, the law remains in place (and on a national basis). If restaurants want to charge more for dishes on a public holiday or Sunday, they need to produce menus that display the total cost. A sign which says ‘X% surcharge’, no matter how prominent, isn’t sufficient.

It’s worth restating that point because there appears to be a belief in some quarters that this isn’t the case. In a post on Lifehacker earlier this year discussing dodgy retailer behaviour, one commenter seemed convinced that the situation had changed:

The law was changed back to the original law. They can now put the percentage surcharge at the bottom. The extra cost with new menus was sending some cafes broke. And since it was only a new law, business owners could have had a claim against the Government for making their costs higher once they started their business.

Every element of this claim is nonsense. The law hadn’t altered at that date, and still hasn’t changed now, as you can quickly confirm by checking the relevant FAQ on the ACCC site. The notion that governments can’t ever introduce laws that change business costs for fear of being sued is equally specious.

So for now, the rules remain the same. I suspect you won’t have to go far in your neighbourhood to find a cafe or restaurant ignoring the ruling, but there’s no question that any such establishment doing the wrong thing in the eyes of the law.

A change may come

The law as it stands is clear, but a change is being considered. Early in December, Treasury announced a review of the consumer law that would change the relevant rulings to allow surcharges to be quoted on menus in this way. That followed a Productivity Commission report which suggested the law be eliminated to help reduce business red tape.

Submissions commenting on the proposed draft amendments are open until January 18. At some point after that date, it’s possible that the law will be altered, and cafes and restaurants will be allowed to use surcharge statements. However, that may not be the top priority for anyone in an election year. And with Parliament not sitting until February, we can safely say that for summer 2012/2013, surcharge signs remain illegal.

Lifehacker’s weekly Loaded column looks at better ways to manage (and stop worrying about) your money.