APRIL 18 — We, as a group, are all stakeholders and are directly involved in the hospitality, restaurant and F&B industries and are deeply distressed with the sudden announcement on 6th April 2015 by Datuk Seri Alias Ahmad, Secretary General, Ministry of Domestic Trade, Co-operatives and Consumerism (MDTCC) that Service Charge cannot be imposed with the introduction of the GST. This abrupt announcement has caught the industry totally by surprise and has since caused total confusion and mayhem among consumers, employees and employers alike. There was no inkling of this announcement and there was absolutely no consultation with any stakeholders whatsoever.

The consumers may have been confused between the terms Service TAX and the Service CHARGE. The Service TAX has rightfully been withdrawn and substituted with the GST. The Service CHARGE is a charge that has been imposed by hotels, restaurants and many other F&B outlets for the past 50 years and has been the practice worldwide.

The further statement by MDTCC that outlets with Collective Agreements (CA) may impose Service Charge added to more confusion. Only outlets that are unionised will have CAs and these are in the extreme minority. The current harmonious relation between employers and employees will be totally disrupted as the government has inadvertently appeared to have encouraged all outlets to be unionised.

Where the outlet does not have a CA, the employment contract between the employer and employee would have stipulated the sharing formulae for Service Charge collected. Sharing of the Service Charge collection is a contractual obligation.

Both the CA and employment contract are private agreements and the MDTCC’s requirement to display these documents for public consumption is completely wrong.

So long as an outlet has clearly stated in its menu a Service Charge and the rate is stipulated, the customer is totally free to choose to patronise the outlet or not to do so. The customer cannot, after having been served, refuse to pay the Service Charge as he is deemed to have agreed to the terms of service once he had decided to be served. The MDTCC’s advice to the consumer that he can withhold payment of the Service Charge is wrong under law of contracts and common law.

The Service Charge levy is a time-tested mechanism to supplement employees’ income and indeed, such an amount can be a significant supplement to the basic salary. The Service Charge collection is commensurate and proportional to the level of business and is a fair reward for the employee who has to put in more efforts to provide the service. This shared responsibility develops both teamwork among all the employees as well as builds common goals for both the employees and employer to ensure the success of the business. The Service Charge mechanism also encourages and improves productivity.

It is better that the Service Charge is itemised in the bill for transparency and clarity. Otherwise, if the Service Charge has to be hidden, the pricing will naturally be increased to account for this Service Charge. The Service Charge will be an expense taken from the business turnover. The quantum either way is absolutely the same.

The contention that there are incidences of employers not distributing the Service Charges does not justify disbanding the practice entirely which will disrupt the entire industry’s mode of operations. There are many avenues for aggrieved parties to seek redress as this is merely a breach of contract issue.

The principle is that the government should not interfere in the management of a business.

Since the Service Charge has been in use for more than 50 years and is a worldwide practice, we strongly call upon the MDTCC not to unilaterally upset this accepted practice for no apparent reason nor improve any transparency and fairness to the system.

 This press statement is jointly issued by:

 1. The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM)

2.  Malaysian Association of Hotel Owners (MAHO)

3.  Malaysian Association of Hotels (MAH)

4.  Malaysia Budget Hotel Association (MyBHA)

5.  Malaysia Retailers Association (MRA)

6.  Malaysia Retail Chain Association (MRCA)

7.  Malaysia Shopping Malls Association (PPKM)

8.  BB-KLCC Tourism Association (BB-KLCC)

*This is the personal opinion of the writer or organisation and does not necessarily represent the views of Malay Mail Online.