Wonder whether this whole focus suddenly on 'service charge collected by employers and paid to workers' is nothing more that a distraction GST and related issues...
Service Charge is very different from Service Tax. Taxes go to the government, whilst this service charge goes to the employees...Service Tax have been replaced by GST... but service charge, which is no tax, remains as it should...
“The rationale behind the introduction of service charge was a combination of a desire to replace cash tips given by hotel and restaurant patrons to employees for services rendered as well as a need to ensure that employees other than front line employees and those who come into direct contact with patrons and customers would also receive their fair share of the tips.” - Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran, Semenanjung Malaysia v. Hotel Equatorial (M) Sdn Bhd [2008] 3 ILR 590 (Award No. 1356 of 2008) at p. 601
“The better the service provided, the more the employer receives by way of sales and employees are rewarded for the better service.”- Pudu Sinar Sdn Bhd v. National Union of Hotel, Bar & Restaurant Workers, Peninsular Malaysia [2002] 1 ILR 833 (Award No. 241 of 2002) at p. 836
Service charges is not merely a product of Collective Bargaining Agreement(CBA) being an agreement between Unions and Employers - many a hotel and restaurant, who do not even have a Union have the practice of service charge in place.
Hence, it was rather foolish for the Ministry to issue the said Directive that:-
(a) required this 10 percent service charge to be stipulated in collective agreements( Well, as mentioned this practice is really based on an agreement between employer and workers, and it happens even where there is any union, and obviously no CA or CBA)}. This government has not facilitated the formation, easy registration and immediate recognition of unions... This government has been silent with regard to 'union busting activities, some of were in GLC or government linked companies,....so are we surprised that not all workers in the service sector are unionized? So now, do not simply say that workers will not get service charge anymore ....if it is not stipulated in CAs..
(b) Require a CERTIFICATE (from presumably the Ministry) displayed on the premises before they can collect 'service charge' (So what, workers are to lose this 'service charge' for a few days/months until their employer gets the Certificate and display it - this is not only absurd but unjust - the 'service charge' arises from an agreement between employer and workers - so why is the BN Government interfering?)
(c) Threatening employers/business of being 'charged under Price Control and Anti-Profiteering
Act 2011' ???
The Domestic Trade, Co-operatives and Consumerism (Ministry has recently issued a directive on the service charge imposed by restaurant and hotel operators that the 10 percent service charge must be stipulated in the collective agreement (CA) between employers and employees before businesses can impose the service charge... In addition, the outlet must display the certificate on their premises so that the consumer will know they will have to pay the service charge; otherwise they will be charged under Price Control and Anti-Profiteering Act 2011.
Suspend gov't decision on service charge
A major concern after the implementation of the
goods and services tax (GST), with effect from April 1, 2015, is the
resulting effects on businesses whether the imposition of service charge
shall be allowed.
The Domestic Trade, Co-operatives and Consumerism (Ministry has recently
issued a directive on the service charge imposed by restaurant and
hotel operators that the 10 percent service charge must be stipulated in
the collective agreement (CA) between employers and employees before
businesses can impose the service charge.
In
addition, the outlet must display the certificate on their premises so
that the consumer will know they will have to pay the service charge;
otherwise they will be charged under Price Control and Anti-Profiteering
Act 2011.
The Associated Chinese Chambers of Commerce and Industry of Malaysia
(ACCCIM) opined that the government announced this implementation
hastily and has caused confusion and chaos among the public.
Subsequently, consumers who are unhappy to pay both service charge and GST have refused to pay the service charge.
This has greatly affected the operation of the businesses and thus put them in dilemma.
Internationally accepted practice
ACCCIM indicated that there are differences between service charge and service tax.
Service charge is the fees collected by businesses which usually will be distributed to the employees.
Restaurants and hotel operators around the world have this convention by imposing the service charge all this while.
Service tax is a form of indirect tax imposed on specified services
which are collected by businesses and submitted to the Royal Malaysian
Customs Department. This service tax has now been replaced with GST.
ACCCIM opined that businesses and the market need time to adapt to the new taxation regime.
The government should not hastily announce any new policy or
implementation; also GST expounded by various government departments
shall be consistent in order to avoid confusion in the market.
ACCCIM stablishing task force on tax
Currently, there is no single piece of legislation to regulate the collection of service charge in the country.
ACCCIM urged the relevant stakeholders to have a consultative dialogue
to further explore and discuss the need for the implementation of
service charge.
Before any decision or clear guidelines are made, the government
authority should suspend the directive given so as not to put a blow on
the industry, especially the food and beverage industry and hotel
operators, and affect the income of the employees of these sectors.
In view that our country is at the early stage of implementation of GST,
business community will encounter problems and difficulties.
ACCCIM hereby announces the establishment of an ACCCIM tax steering task
force of which members of the task force are comprises of tax experts
and qualified accountants, to collect feedback and study the issues
encountered by the business community, and thereafter, submit to the GST
monitoring committee of the Finance Ministry as well as GST technical
committee of the Royal Malaysian Customs Department through our
representatives for discussion and deliberation.
LIM KOK CHEONG is president of the Associated Chinese Chambers of Commerce and Industry of Malaysia.
Source:- Malaysiakini, 11/4/2015, Suspend gov't decision on service charge
See earlier related post:-
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