Businesses warned over Easter holiday surcharges

Businesses that open for trading over Easter, such as cafes and bars, must not mislead their customers about their reason for a surcharge, the Commerce Commission warns.

Since the introduction of the Holidays Act 2003 many traders have chosen to apply a surcharge on public holidays to compensate for higher wages on those days.

However, the commission has reminded traders that the Saturday and Sunday of Easter are not public holidays.

“It would be misleading under the Fair Trading Act to claim a surcharge on Saturday and Sunday over Easter and represent that this is due to the Holidays Act, when those days are not public holidays,” says Kate Morrison, commission general manager competition.

“The commission cannot prevent businesses from surcharging, but they must be truthful about the reason for any surcharge.

“A business can charge what it likes, and consumers will choose whether to pay or to go elsewhere. But the reason for any surcharge must not mislead.”

Businesses that do apply a surcharge must ensure their potential customers are alerted to this, such as by a prominently displayed sign, before they order or make a decision to purchase, Ms Morrison says.

“This gives consumers the ability to decide whether they are prepared to pay a surcharge or would rather go elsewhere.”

Also, a business may not be entitled to charge a 'Holidays Act' surcharge if the staff working on a public holiday, in this case Good Friday and Easter Monday, are casual and therefore not being paid extra under the Holidays Act regulations.

To then claim that the surcharge was for reasons of ‘the Holidays Act’ would potentially breach the Fair Trading Act because it would be misleading, the commission says.

In October the commission issued a warning to Spotless Services (NZ) after it displayed signs at the New Zealand International Sevens tournament in Wellington on Waitangi Day 2009 and 2010 that were at risk of breaching the Fair Trading Act.

On those days, Spotless Services had signage in the public concourse area of the Westpac Stadium which stated "Please Note 15% Surcharge (Due to Holidays Act)".

A commission investigation found that Spotless Services recovered significantly more from the surcharge than the actual cost of fulfilling its obligations under the Holidays Act.

This was because many of the people serving food and alcohol at the tournament on Waitangi Day were either part of volunteer groups or casual staff and were not covered by the Holidays Act.

nkloeten@nbr.co.nz