Abolish the Service Charge

The Consumers Association of Penang is surprised not only by the fact that our government has given in to pressure so easily and allowed the service charge to remain, but also at the reason given as to why the charge is necessary. The statement made by the secretary-general of the Domestic Trade, Cooperatives and Consumerism, Datuk Seri Alias Ahmad, is that “the basic wages in some hotels is RM350.00” and that “potential employees will shy away from working in the industry if the take home pay is too low”.

Those working in Malaysia, locals or foreigners, should note that:

• The Minimum Wages Order 2012 states that employers with more than 5 employees will pay his/her employees not less than RM900.00 in Peninsular Malaysia and not less than RM800.00 in Sabah, Sarawak and the Federal Territory of Labuan.

• The National Wages Consultative Council Act 2011 (Act 732). Section 43, states that an employer who fails to pay the basic wages as specified in the Minimum Wages Order to his employees commits an offence and shall, on conviction, be liable to a fine of not more than RM10,000.00 for each employee.

With this information in mind, the implications of Datuk Seri Alias Ahmad’s statement are disturbing.

1. The government unreasonably expects consumers to be paying a substantial amount of the salary for restaurant and hotel workers by way of service charges. With or without the service charge, workers should be getting RM900/RM800 (depending on area) as is their right by law – but they are not. Any earnings from service charges are a bonus not included in the minimum wage.

2. The government is aware that “the basic wage in some hotels is RM350.00” which is way below the minimum wage yet they have blatantly indicated to the public that they are turning a blind-eye to the offences these employers have committed under the National Wages and Consultative Council Act 2011.

All things considered, CAP is against hotels, restaurants or any other business imposing any kind of service charge and is of the opinion that it should be abolished at once. Service charges are not meant to be used by employers to reduce the amount they owe their employees. We also ask that the Ministry of Human Resource smoke out these offenders who are not paying their employees the mandatory minimum wage and bring them to justice.

Letter to the Press, 24 April 2015