Latest News On 10% Service Charge: It Is No Longer Allowed

UNLESS the restaurants, hotels and cafes have a working agreement with the employees. Then, they are allowed to impose the 10% service charge.

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All hotels and restaurants are no longer allowed to impose a service charge effective today, 6 April 2015

Domestic Trade and Consumerism secretary-general Datuk Seri Alias Ahmad said the instruction is temporary, until the Government figures out a way to regulate the collection of service charges.

"At present, there is no official body or ruling that regulates the collection of service charge. It is an age-old international practice. However, as we have received many complaints from consumers, we came to this decision," said Alias at a press conference, Monday.

Establishments are only allowed to impose the 10% service charge if they have a collective agreement between employer and employees

Businesses that do not have a collective agreement on service charges but still continue to impose it will be subject to action under the Anti-Profiteering Act.

This is because the purpose of service charge is to supplement the wait staff's meagre income, yet many employers have been known to abuse it

The staff members at Serai Restaurant are worried that their livelihood will be affected if service charge is scrapped.

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Typically, the service charge amounts to 10 per cent of a customer’s bill in lieu of a tip and is shared among the waiting staff at the end of the month.

“If you take away the service charge, I am in big trouble,” said cashier Nurshamiqah Shamsutin, 20, of Serai Restaurant in Section 16. “I get a basic salary of RM350 plus a points system and the service charge based on my salary and the restaurant’s performance, pushing my income to as high as RM1,450.”

However, while employees benefit from service charge, some are being taken advantage of, with some employers keeping the money.

“I know the service charge is for services rendered by us to customers, but I didn’t know I was entitled to a part of it. I have never received a commission or bonus from the service charge,” said a waiter at a western restaurant in Jaya 33. “It doesn’t matter as it all goes to the boss,” said another restaurant worker.

Furthermore, the establishments that are imposing the charge must display a notice to customers

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Businesses are also required to display the services provided to the customers, should they wish to impose the service charge. He explained that service operators should explain the reason behind imposing the service charge to customers.

“Service operators should know the types of services they receive, if it is self-service, what kind of service they (business) they wish to charge?

“It is the consumers rights to make a decision and no service charge rate is set,” said Alias during a press conference held at the Finance Ministry today.

This is to be the rule until the newly-established working committee completes a review on service charge in Malaysia

“Until now there is no body which controls the service charge issue in Malaysia and the government is facing restraints as there is also no specific Act for it.

“This my administration is issuing this order,” said Alias.

Alias also informed that a working committee has been established involving KPDNKK, Finance Ministry and the human Resource Ministry to review the service charge in the country.

After the implementation of GST, customers were complaining about the service charge that was also subjected to the 6% government tax

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Many were confused as to whether they should pay the service charge. To fully understand why restaurants impose it and whether you should pay for service, we recommend reading this:


Restaurants And Hotels To Display Service Charge Certificate If They Want To Charge For Service

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The Domestic Trade, Cooperative and Consumerism Ministry will be issuing a service charge certificate to restaurants and hotels soon.

Minister Datuk Seri Hasan Malek said the certificate would be similar to the halal certificate so consumers would be informed about the specifics of the service charge imposed.

He added that restaurant and hotel operators must apply for the certificate from KPDNKK, thus allowing them to impose the service charge.

He also said the displayed certificate would make it easier for consumers to decide if they wanted to patronise a restaurant or hotel which imposed the service charge.

"When we issue the special certificate, it means that the consumer will know that they will have to pay the service charge and the GST, and the outlet must display this certificate on their premises," he told reporters here Tuesday.

The minister has yet to announce when would this measure be implemented.

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