Keep hands off cash from service charges, MTUC tells bosses.

Service Charge is just - well, the tipping system would only benefit the front line employees... but not the others.  What is collected now is shared amongst all employees, and this is good....

Some are getting confused that this is SERVICE TAX (like Sales Tax), both of which have been replaced by this new GST - Get a better understanding - follow this link - Stop interfering with workers' service charge - it is NOT the old service tax or sales tax now replaced by GST?

Well, it all seem to have started when one Deputy Minister started by directing attention to this service charge, and even suggested customers may not have to pay this ...then we have 2 PKR MPs talking about a private member's bill (PKR MPs, Sim Tze Tzin and Manivannan, being anti-worker? Use worker entitlement for cleanliness courses?), and recently there was report of a DAP MP refusing to pay service charge (http://www.thestar.com.my/News/Nation/2015/04/13/Tanjong-MP-refuses-to-pay-service-charge/) . We expect better from our MPs - and depriving workers at hotels/restaurants of their 'tips' - which in Malaysia comes as service charge is shameful. I believe these Opposition MPs fell into the 'trap' set by that Deputy Minister - a good tactic to divert opposition to GST by focussing anger towards workers' service charge. Hopefully, these MPs have apologized and clarified matters... or will ego keep them n this path towards what....abolition of 'service charge' in Malaysia????

Why then is service charge placed as an addition to the cost of product/service? Well, that is transparency - the customer is kept in the know that this 10% is going not to the employer/business but rather to the employees of the establishment.

Well, it could always have been hidden - as part of the cost of the price of product/services and thereafter, the employer could take out 10% and hand it over to the employees as being  their 'tip money or service charge'. Yes, it could have BUT the move was in favour of transparency. Employers also was clear as to which was their own money, and which was really workers' monies. 

Likewise, the government also likes this kind of transparency - not only now but also before. So when you get your bill/receipt, it will be most clear how much was for tax (then it would have been for government tax, and then that would have been the service tax - now replaced by GST), and there would have been always been the 'service charge'.

Keep hands off cash from service charges, MTUC tells bosses

PETALING JAYA: The Malaysian Trade Unions Congress is urging employers to keep their hands off the service charge money which belongs to employees.

The call follows reports that the majority of hotels had been using the service charge to meet the minimum wage for their employees. Following this, there have been suggestions to abolish the charge altogether. 

MTUC secretary-general N. Gopal Krishnam said it was wrong for employers to take the amount gained from the service charge to make up for any shortfall to the RM900 minimum wage set by the Government.

He also said the service charge system should continue due to the low earnings that hotel workers got.

“Service charge is not something new. It has been there since the hotel industry started in the country,” he added.

He also agreed that service charge gave more income stability for the workers compared to the tipping practice.

“Service charge is transparent while tipping is not. Some might get RM800 and some might get zero.

“Whatever they receive (through service charge), they are sharing the money and all workers will get a fair amount based on their performance,” he said

.

Krishnam, however, expressed regret that the Government was rushing into resolving the matters without listening to all parties involved.

“A tripartite meeting between the Government, employers and employees is essential to help improve the matter,” he said.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan, however, said ho

tel and restaurant business owners were allowed to add some of the entire amount collected from the service charge to complete the minimum wage requirement.

“Based on the guidelines on the implementation of the minimum wages, hoteliers and restaurateurs are given permission to use a portion or full collection from the service charge to be made a part of the salary paid to the workers.

He also said that it would be unfair for employers if the service charge was abolished as they would have to fork out a large portion of money to meet the minimum wage requirement. 

On the requirement that only hotels and eating establishments with a collective agreement with their workers can collect a 10% service charge, Shamsuddin regarded that as unfair. The requirement came about following the introduction of Goods and Services Tax (GST) on April 1.

“This will also lead to disputes between employers and employees as matters related to service charge have already been included in the appointment letter,” Shamsuddin said - Star Online, 11/4/2015, Keep hands off cash from service charges, MTUC tells bosses

See earlier related post:-

PKR MPs, Sim Tze Tzin and Manivannan, being anti-worker? Use worker entitlement for cleanliness courses?