PUTRAJAYA, April 9 — No collective agreement (CA), no service charges.
This was the stand of the Domestic Trade, Cooperatives and Consumerism Ministry over a plea made by Malaysian Association of Hotels to allow hotels without CA to collect service charges.
The ministry’s secretary-general Datuk Seri Alias Ahmad said pending a concrete government policy on service charges, hotels and restaurants must have a CA with their employees before they can impose such charges.
“It has to be a CA and not any other kind of agreement.
“The service charge is in the spirit of tipping. So tips should go to workers, not into the employer’s pocket. Also, workers now have the right to a minimum wage, so tipping (or the lack of) should not be an issue,” he said yesterday.
Since the start of the Goods and Services Tax (GST) on April 1, many customers had been complaining about the 10 per cent service charges at hotels and restaurants. The service charges itself is subject to GST of 6 per cent.
Alias reiterated hotels and restaurants must display notices to inform customers if there are service charges at their outlets.
“We will issue guidelines on the size and format of these notices but we will leave it to the businesses to display them.
“As long as they have a CA, it is fine. For the rest, we will carry out enforcement (checks),” he said.
Lawyer Derek Fernandez agreed with the ruling.
“Ideally a CA would ensure an employee receives a stipulated amount of service charge payment from his or her employer.
“But not all hotel staff are union members. Most of them are foreign contract staff and are not eligible to join unions,” he explained.
While there is no restriction for full time foreign workers to join a union, many foreigners are contract staff.
“In those cases it would be fair if the individual contracts for service specify the contract worker is lawfully entitled to a portion of the service charge collected, pro-rated against all other employees and contract workers,’’ he said.
“These monies are being collected under the assumption they will be given to workers in lieu of tips but some unscrupulous operators are not giving this money to the workers or are hijacking part of it. This is a criminal breach of trust.”
Malaysian Trades Union Congress secretary-general N. Gopal Krishnam said while there are unscrupulous employers who are not channelling the collections to their employees, the ministry’s ruling was unfair as only 7 per cent of workers nationwide are union members.
“If a worker’s appointment letter states he or she should receive a part of the service charge, then it is as good as a CA,’’ he argued.
