Norwegian Cruise Line Changes Service Charge Policy

[jb456]

Yes, but the difference is they can track it more properly after disembark which frees up Guest Services with not having to 'deal with it". Again, if your don't like their new procedure of making you pay 1st and remove later - don't ever cruise with them in the future....

 

Never said I dont like the new procedure. Not a big deal at all.

 

Old way I am sure they had their computer techs add a colum in their system that marked each account that removed dsc. So they could easily do sql searchers in their database for reporting purposes. Its not hard for techies to create any system.

 

Only difference now with new procedure is the "reason" they may now keep the reason marked down where old way I doubt the staff at gs counter wrote it into the system.

Edited September 19, 2015 by jb456

[jb456]

A professional renders the same service regardless and I've found the NCL staff to be most professional.

 

Thats what they were hired to do in the first place before any tips, incentives. They have a job desciption to follow.

[sparks1093]

Thats what they were hired to do in the first place before any tips, incentives. They have a job desciption to follow.

 

And they rely on the service charges for most of their income, whether you like it or not. If you do tip the way that you state that you do then they probably like your way better, but many who remove the service charges leave nothing in their place.

[luddite]

Thats what they were hired to do in the first place before any tips, incentives. They have a job desciption to follow.

 

Wait. What? You don't know how the system works?!

Yikes. THAT explains all of your nonsense.

Yikes again.

 

Ooop! It just occurred to me that there might be another reason for your nonsense........

 

 

 

Nah. That wouldn't be the reason. Maybe.

[jb456]

A professional renders the same service regardless and I've found the NCL staff to be most professional.

 

You get hired as a maid. Your job discription is to change the garbage, chane the sheets, vacum, put towels in blah blah blah and be polite to guests with a smile. Thats their job nothing warrants a tip.

 

Now when they go beyond that knowing your name, taking 5 min out of their busy day to have a convo on a personal level, making towel art, etc etc tip deserved.

 

Every employee is different and slacker ones dont deserve the same as the hard working employee. Just like the flawed gratutity on drinks that are automatically charged. No way that the crappy bartender with a stone cold face that takes 20 min to serve you deserves the same tip as the awesome bartender who knows to bring your drink before you take the last sip.

Edited September 19, 2015 by jb456

[BlueRiband]

I didn't scroll through all the pages on this thread, but the board's industry insider explained why service charges are not included in the fare - it partially has to do with tax liabilities for the crew.

 

...This entire concept of tipping in lieu of regular wages started on the White Star Line in Britain over 100 years ago. Although it has gone through many permutations, the original concept is still basically there; great service staff will receive plenty tips and be happy to stay on the job; poor service staff will not receive very much in the way of tips and be quite happy to leave.

 

But now it is much more complicated than it was a century ago.

 

Most of the tipped crew are not from Britain, but from all over the planet. Each one of the sometimes hundreds of nationalities represented in a ships crew has a different set of tax laws that apply to his or her earnings. In most of those countries, gratuities are not taxed, but earnings are. If passenger fares are increased to cover the gratuities, the total earnings of the service staff will all be taxable - in effect further reducing their salaries.

 

Currently most cruise lines pay tipped employees around US$1 per day plus tips. The staff's official salary is very low, meaning they have little or no tax liability in their home countries. If we change to a salaried system, many countries would not only require the crew to pay income taxes on all those earnings, but would also require the cruise lines to pay local payroll taxes on those total earnings. The cruise lines would be forced to increase your cruise fares much higher to cover the substantial financial losses by the crew and the cruise line companies.

 

Each one of the sometimes hundreds of nationalities represented in a ships crew is a member of a national maritime union - often from their home country. Each union has negotiated a contract with the cruise line, specifying benefits and earnings (including tips).

 

If the cruise lines change the system of paying their service staff, all the labor contracts with all the unions would have to be renegotiated, which could take decades...

 

And if the tipping concept is removed, we are haunted by an age-old argument from our passengers. If the incentive of tipping is removed, and everyone has a guaranteed salary instead, where is the incentive to do a great job?...

 

I still agree with you that some sort of change is desperately needed. But nobody seems to be able to come up with a change that will make the situation better - unless you and I are able to convince your fellow cruisers to pay a 100% surcharge on their cruise fare.

 

The more I think of this the more I would like to see other lines adopt NCLs new policy. Shore side will have a digitized, central record of every request for gratuities to be removed and the stated reason in the passenger's own handwriting.

 

Those who repeatedly complain but for no legitimate reason can be told that NCL is sorry to be unable to meet their expectations and they will best be served on another line.

 

Then there will be the Cheap Charlie or Wightwad Wallis who state that they are removing gratuities 1) because they can, 2) they don't want to pay it, 3) NCL is lining their corporate pockets with it, or 4) they're pensioners/retirees and scrimping just to sail. They can also be told that the hard working staff does their utmost to provide an enjoyable holiday, but their needs will best be served on another line.

 

As for those who say they will never again sail on NCL due to this policy - I'm sure the crew will be happy to see them take their business elsewhere.

[abe3]

Fantastic new procedure! Love it and hopefully this will stop the cheapskates looking to save a buck or two.

[abe3]

This is also going to make the guest services area less crowded and better for me to get the real important questions I would like from them.

[swedish weave]

And the Service Charge isn't a tip so all is good. If the Service Charge is paid.

 

If the service charge is not a tip as you say, why does NCL offer "free gratuities" as a booking bonus and interpret it to mean the DSC ??

 

In that respect, IT IS A TIP> Per NCL's opwn words.

[SeaShark]

If the service charge is not a tip as you say, why does NCL offer "free gratuities" as a booking bonus and interpret it to mean the DSC ??

 

In that respect, IT IS A TIP> Per NCL's opwn words.

 

What a marketing person calls something doesn't determine what it is.

 

 

Money that is given by a customer where the customer determines how much to give, and to which employee that money is given, is a gratuity.

 

If the amount is determined by the company, collected by the company, and distributed at the discretion of the company, it is a service charge.

[jb456]

What a marketing person calls something doesn't determine what it is.

 

 

Money that is given by a customer where the customer determines how much to give, and to which employee that money is given, is a gratuity.

 

If the amount is determined by the company, collected by the company, and distributed at the discretion of the company, it is a service charge.

 

This is right to determine the differences between a tip and service charge because they are two completely different things. NCL however in terms and conditions says "prepayed gratutities also referred to as service charge"

 

Like you said tip vs service charge are two completely different things so NCL needs to fix their wording. NCL also says in FAQ no tipping required but turn around and say the service charge is gratuties.

[SeaShark]

This is right to determine the differences between a tip and service charge because they are two completely different things. NCL however in terms and conditions says "prepayed gratutities also referred to as service charge"

 

Like you said tip vs service charge are two completely different things so NCL needs to fix their wording. NCL also says in FAQ no tipping required but turn around and say the service charge is gratuties.

 

Couldn't agree more...NCL is getting sloppy in their wording. The "also referred to as"s do nothing but confuse people.

 

Words have meaning and the sooner NCL realizes that, the better for everyone.

[fshagan]

Not exactly.

 

Yes, the base wage of a tipped position may be less than $2.50 an hour, however, if enough tips aren't earned to bring the hourly amount up to minimum wage, the employer must pay the difference.

 

It depends entirely on the state. Here in California a person must be paid the CA minimum wage, which is higher than the federal minimum wage. The servers in the restaurants I did bookkeeping for paid their servers starting at $10 an hour a couple of years ago. The servers generally made from $150 to $200 a night in tips alone, and they in turn did "tip outs" to the bartender, bar back, busser and (in one place) the hostess. That last part, the tip outs, is common everywhere.

 

There's also a myth that tips don't affect the employer's income, but the employer must pay the federal taxes on the tip money. A typical paycheck will have the server's tip income received through the week added to the hourly wage, the employer's share of federal and state taxes calculated on that total, then the tip money taken out (because the server has already "cashed out" their tips at the end of each shift, taking their $150 - $200 in cash).

 

So there are dozens of ways tips are collected, distributed and handled. In the US, "service charge" actually belongs to the house, while "tips" belong to the employee. If the restaurant is under a particular IRS mandate, the "service charge" model must be used, and the tips cannot be cashed out without all the taxes being withheld.

 

Why all this detail? Because any time I have read some thing from someone actually claiming to know "for sure", the situation is much, much different than we imagine. While the US taxes tip income, many countries do not. This site says this about taxable income for Filipinos:

Exclusions from Gross Income include Life insurance; Amount received by insured as return of premiu; Gifts, bequests and devise; Compensation for injuries or sickness; Income exempt under treaty; Retirement benefits, pensions, gratuities, etc;

 

How many of the crew you see on an NCL ship are from the Phillipines? Quite a few in my opinion.

 

In this post BruceMuzz claims to know about this issue from an inside perspective, and says that the cruise lines would have a revolt if they moved from a primarily-tip income to the "decent salary they can live on without tips" that many of us have opined would be better. Better for whom? The rich westerners who really don't care if they pay an extra $13.50 per day or $94.50 per week for a cruise they paid $1,800 for ... after all, why not just make it simple and have the cruise fare $1,894.50?

 

Because the poor people who are working on the ship would have to see their share of that $94.50 reduced by income tax unnecessarily. I haven't seen a survey on it, but I suspect most Filipinos would prefer tax-free income rather than taxed income.

 

So NCL uses some super secret formula to pay their employees mostly in tip income from the pool of money we pay into. No, not really "for our convenience" which is simply marketing-speak for "how can we polish this turd?". But in reality, the tips-as-income culture is for the benefit of the working man and woman.

 

So, it doesn't matter if you pay them tips in "cash" because the cash from you and the tips from NCL are both tax-exempt for them. They aren't hiding it from their tax authorities; they don't have to claim it regardless of the source.

Edited September 19, 2015 by fshagan

[SeaShark]

A better explanation:

 

 

It's not uncommon for your bill at a restaurant to come with both a service charge and a tip. Sometimes there's no service charge at all, but still a line for a tip. Other times, neither are there, but one, or both, are expected of you.

 

To make matters even more confusing: While the service charge seems to be a number that's already calculated, the tip is there for you to calculate, but ... sometimes "suggested" tip amounts are also given.

 

Are service charges and tips the same? Not according to a fairly recent addendum from the IRS, which clarified the difference.

 

What Is a 'Tip'?

 

The IRS has set out the following traits as characteristic of 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 negotiation or dictated by employer policy; and

Generally, the customer has the right to determine who receives the payment.

 

 

Historically, it has been suggested that the term "tip" originated from an innkeeper's sign to ensure faster service. More currently, the general use of a tip remains the same. Customers have the option of tipping their server for punitive reasons (i.e., deducting if the service is bad) or as a reward (if the service is particularly outstanding).

 

What Is a 'Service Charge'?

 

Service charges will usually be clearly indicated as such. If any of the above listed traits for a tip are missing, however, then it is usually a service charge. In other words, a service charge is, when:

 

The payment is mandatory;

The customer does not possess the unrestricted right to determine the amount;

The payment is the subject of negotiation or dictated by employer policy; and

Generally, the customer does not hold the right to determine who receives the payment.

 

 

The IRS provides an example of a service charge occurring when a banquet hall charges at a pre-determined rate not negotiable by the customer. In most cases, that money is then distributed to employees who rendered the services that the hall required at that event -- for example, bartenders, waiters, and janitors.

 

Service charges are also common if you dine out in larger parties. They are set for the staff and facilities to be able to accommodate you and exert the additional service needed when there are more bodies.

 

Does It Really Matter?

 

But what's the big deal? While the "tip" versus "service charge" distinction may not seem too important to a customer, it may make a big difference to your server. That's because a "tip" belongs to the server, according to the IRS, while a "service charge" may not.

 

So next time you're dining out, take a close look at your bill. If you get to choose the amount you're leaving, then you're most likely leaving a tip. But if you don't get to choose the amount, then technically you're paying a service charge -- even if it's called a mandatory "gratuity" on the receipt.

[BlueRiband]

What an irony. So stiffing the hard working crew is wrong but them together with the cruise line stiffing their home countries where the taxable income would be needed to keep up and enhance the public infrastructure, schools and health care system for their families back home is acceptable.

What a sick system.

 

I truncated one part in BruceMuzz's post: This was the comment where just one change - which day of the month the crew got paid - took 3 years to negotiate. There was no other issue except that one. And that was just one union among the 20 or so that represent a typical cruise ship's employees.

 

It's not going to change anytime soon. The logistics of negotiating an entirely new pay system with all of the different maritime unions that comprise a ship's crew could take decades.

[NMLady]

You get hired as a maid. Your job discription is to change the garbage, chane the sheets, vacum, put towels in blah blah blah and be polite to guests with a smile. Thats their job nothing warrants a tip.

 

... .

 

When a motel maid does her job, I leave a tip. Otherwise I don't. I am a believer that those menial jobs deserve tips.

[dallas16]

We got off Norwegian Spirit yesterday and there was a form onboard which either gave you the option to add extra gratuities and give a reason why or gave you the opportunity to reduce your service charges and give reasons why. You then filled the form in what you wanted to do, gave it back to the guest services who signed the form and processed the required changes to your onboard account with no questions asked.

[hpecorari]

We got off Norwegian Spirit yesterday and there was a form onboard which either gave you the option to add extra gratuities and give a reason why or gave you the opportunity to reduce your service charges and give reasons why. You then filled the form in what you wanted to do, gave it back to the guest services who signed the form and processed the required changes to your onboard account with no questions asked.

 

Your form/photo did not work.

 

Did that form have to be sent anywhere or did GS make the adjustments themselves right there and then?

 

Harriet

[sparks1093]

You get hired as a maid. Your job discription is to change the garbage, chane the sheets, vacum, put towels in blah blah blah and be polite to guests with a smile. Thats their job nothing warrants a tip.

 

Now when they go beyond that knowing your name, taking 5 min out of their busy day to have a convo on a personal level, making towel art, etc etc tip deserved.

 

Every employee is different and slacker ones dont deserve the same as the hard working employee. Just like the flawed gratutity on drinks that are automatically charged. No way that the crappy bartender with a stone cold face that takes 20 min to serve you deserves the same tip as the awesome bartender who knows to bring your drink before you take the last sip.

 

So an introverted person that cleans your cabin to perfection and fills every request without hesitation is going to get stiffed because they didn't try to form a personal relationship with you? The bartender that takes 20 minutes to serve you because there are 10 other people ahead of you gets stiffed because you had to wait?

 

The service charge (or tip on other lines) is their income for doing their job, again whether you like that or not. It is for doing their job satisfactorily. Now, as the customer you get to decide what constitutes "satisfactorily" and because of that you have the opportunity to adjust the service charges if the service doesn't meet with your satisfaction.

 

Why did the cruise lines start including these charges? Because when more and more people started to cruise more and more people didn't understand that the crew lives off of what the passengers provide and too many passengers would leave nothing. So the cruise lines started recommending a daily amount (most people know the recommended amount in a restaurant is 15% of the bill) which worked for awhile but again, too many were not leaving that so then they had to start auto-charging it. All because people either didn't know or didn't care what their obligation was. Yes, this is a way to keep prices low but the cruise lines aren't the only ones that do this.

 

When a guest removes the service charges the employees have to answer for it because the presumption is the service must have not been up to snuff. If this happens too many times then the employee is at risk of not having their contract renewed.

 

I did not write all of that in an effort to change your mind, because your mind is already made up. But there are many people following this thread that haven't made up their mind and I wanted to spell it out for them.

[maywell]

Your form/photo did not work.

 

Did that form have to be sent anywhere or did GS make the adjustments themselves right there and then?

 

Harriet

 

The Spirit is in Europe embarking / disembarking in EU ports right now, that why the procedure is tweaked a bit differently. (I checked - because if it was US ports, NCL has alot explaining to do) All that poster you quoted prove was, the EU laws give protection to those everyone want remove DSC no matter what - NCL is not going to pick a fight against EU on this one because they would actually lose the case(s).

[sparks1093]

 

because a "tip" belongs to the server...while a "service charge" may not.

 

 

But this language suggests that sometimes it may be. I do get what you are saying and agree for the most part but when we get bogged down in the minutiae of what is or what isn't we really lose sight of the big what is and that is the service charge represents the main income for many crew members. Call it a tip, call it a service charge, call it Bob's your uncle, that is the bottom line. NCL made it clear years ago that the service charge was developed to replace tips because it was the easiest way to deal with the issue under the Freestyle concept (not the best, not the only, but the easiest).

[SeaShark]

But this language suggests that sometimes it may be. I do get what you are saying and agree for the most part but when we get bogged down in the minutiae of what is or what isn't we really lose sight of the big what is and that is the service charge represents the main income for many crew members. Call it a tip, call it a service charge, call it Bob's your uncle, that is the bottom line. NCL made it clear years ago that the service charge was developed to replace tips because it was the easiest way to deal with the issue under the Freestyle concept (not the best, not the only, but the easiest).

Yeah...it MAY be, but only if all four conditions are met. Since NCL determines which employee gets what amount, on NCL it will ALWAYS be a service charge.

[hpecorari]

The Spirit is in Europe embarking / disembarking in EU ports right now,

 

That pretty much answered my questions.

 

Harriet

[sparks1093]

Yeah...it MAY be, but only if all four conditions are met. Since NCL determines which employee gets what amount, on NCL it will ALWAYS be a service charge.

 

But NCL is not required to use the IRS definitions so they can define it however they want to. In what other venue that charges a service charge is the charge adjustable in any way, shape, or form? None that I am aware of, it's fixed and cannot be changed by the customer.

 

But as I said at the end of the day it matters little because this is how the non-salaried crew gets paid.

[nbsjcruiser]

When my husband, daughter and I went on our first cruise earlier this year (Carnival Ecstasy), we were impressed with the overall workings of the crew. They were so pleasant and professional, and were an integral part to our overall cruise experience. Why would anyone be so friggin' cheap to cut off their tips is beyond me:mad:

 

The very first cruise we went on was way back in 2001 on the Fantasy. On the last morning there was a lineup of at least 30-40 people pulling their tips off. I was really quite shocked by it because I thought the food and service was outstanding and looking back years later I still think it ranks as one of the best cruises we were on in terms of service and food. I remember years later watching a documentary on ship workers. For part of the week they followed a room steward. In those days you tipped in an envelope and handed it to the waiter, room attendant and so on. Typically the room steward got their tip on the last morning when they went in to clean the room. This particular room steward entered the room to find no tip. She broke down crying while explaining that no tip meant no money for her and her family back home.

 

We've been on 19 cruises I think it is and I can honestly say I've never received service or food bad enough to warrant removal of tips and I find it hard to believe that anyone could justify removing tips from all of the crew intended to receive the tips.

Edited September 19, 2015 by nbsjcruiser