Federal Court: Hotels Cannot Use Service Charge To Meet Minimum Wage

INTRODUCTION

Service charge is a benefit or cash emolument that is specific to the hotel industry. Service charges are imposed by hotels as part of the bill to their customers (e.g. 10% of the bill) in lieu of "tipping". The service charge is then distributed to the employees. The purpose of service charge is to supplement the monthly salaries paid to workmen in the hotel industry.

Recently, the Federal Court in Crystal Crown Hotel & Resort Sdn Bhd (Crystal Crown Hotel Petaling Jaya) v Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia [2021] MLJU 385 had to consider whether service charge can be utilised to meet the statutory minimum wage.

BACKGROUND FACTS