Yew Huoi, How & Associates | Leading Malaysia Law Firm

Menu
  • Legal Updates from YHA Law Firm

EMPLOYMENT LAW – MINIMUM WAGE – SERVICE CHARGE

Q: I am an employee in a hotel. In this industry, it is a standard practice for hotel employees to collect a 10% service charge from customers. The service charge is collected by hotel industry on behalf of us. However, recently the hotel industry implements a top up structure where they could utilize the service charge to top up any amount below the minimum wage.
Do they have the right to do so?
No, the hotel industry is not entitled to utilize part or all of the employees’ service charge to top up the minimum wage.

What legislation governs minimum wage in Malaysia?
The legislation governing minimum wage in Malaysia is the National Wages Council Consultative Act 2011 (“NWCCA 2011”) and Minimum Wages Order(s) 2012 to 2020 (“MWO”).

What is the objective of minimum wage policy?

  • The object of NWCCA 2011 and MWO are to serve as a social legislation with a view to protect workers against unfair wages and ensure they are not exploited.

Definition of minimum wages

  • Under NWCCA 2011, ‘minimum wages’ are defined as ‘basic wages’ determined by the government under the MWO.

Definition of basic wages

  • Under Employment Act 1955, ‘wages’ are defined as ‘basic wages’ and ‘other cash payments payable to an employee for work done in respect of his contract of service’.

Whether service charge can be utilized to top up the minimum wage?

  • Service charge falls within the definition of ‘other cash payments’, thus service charge cannot be a part of the basic wages.
  • ‘Service charge’ is additional tips which does not belong to the hotel industry but the eligible employees. The hotel industry merely collects and holds the monies as a fiduciary or trustee until distribution to the eligible employees. In other words, the ownership of the service charge vests in the eligible employees.
  • As such, the hotel industry cannot utilise money it does not own. The hotel industry is not entitled in law to appropriate and utilise the service charge to meet its statutory obligation.

The hotel industry explains that it is because COVID-19 pandemic affects the hotel industry severely.
The Covid-19 pandemic which affects the hotel industry as a whole cannot be a reason for the Courts to depart from the accepted principles of law in respect of the construction that ‘service charge’ is not a part of ‘basic wages’ under the minimum wage legislation.

Case in point: Crystal Crown Hotel & Resort Sdn Bhd (Crystal Crown Hotel Petaling Jaya) v Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia [2021] 3 MLJ 466. Federal Court (Putrajaya) – Civil Appeal no: 02(f)-4-01 of 2018

Back to Latest Legal Updates

Recent Post

ADMIRALTY IN REM – WRONGFUL ARREST – POSSESORY RIGHT – ARREST GONE WRONG: WHEN A SHIP ARREST BACKFIRES WITH DAMAGES

In Eletson Holdings Inc & Ors v The Vessel “Paros” [2026] 8 MLJ 80, the High Court set aside an arrest after finding that the plaintiffs had no proprietary or possessory right to the vessel at the time of the writ, as the bareboat charter had already been terminated. The Court held that the claim was in substance a corporate control dispute dressed up as an admiralty action, and emphasised that such disputes do not fall within admiralty jurisdiction. Critically, the plaintiffs’ failure to disclose the termination of the charter when obtaining the arrest warrant amounted to a serious breach, leading the Court to find mala fides or gross negligence and order damages for wrongful arrest. The decision reinforces that ship arrest is a powerful remedy that must be exercised with full disclosure and a proper maritime foundation.

Read More »
14 July ,2026 No Comments

GUARANTEE – PERSONAL GUARANTEE ≠ PAY ON DEMAND: COURT DRAWS THE LINE BETWEEN SURETYSHIP AND DEMAND GUARANTEES

In CE Energy DMCC v Bashar [2026] Lloyds’s Rep 267, the Commercial Court clarified that not all guarantees labelled “on demand” will be treated as demand guarantees. On a proper construction, the court held that the personal guarantee in question was a contract of suretyship, requiring proof of the principal debtor’s liability rather than automatic payment upon demand. Crucially, the court found that the debtor’s “irrevocable” admissions of debt in a payment agreement created a binding contractual estoppel, which the guarantor could not challenge. The decision also confirms that, where payment is due on a “day certain”, a seller may still claim the price notwithstanding retention of title. The case underscores the importance of precise drafting and the risks of entering into settlement agreements that conclusively fix liability.

Read More »
14 July ,2026 No Comments

MARITIME NEGLIGENCE – PLAINTIFF CLAIMED FOR DAMAGES CAUSED DURING ANCHOR DEPLOYMENT OPERATION – CALDERBANK OFFERS

In Tom Eastwind 365 Sdn Bhd v The Owners of the Vessel “Icon Sophia” [2025] 9 MLJ 397, the High Court held that the doctrine of res ipsa loquitur applied in a maritime collision during an anchor deployment operation, allowing an inference of negligence against the tug owner. The Court clarified that the doctrine is not defeated merely because the defendant adduces evidence explaining the accident – such evidence goes to rebutting the inference, not preventing it. While liability was established due to the tug master’s error of judgment in manoeuvring too close to a stationary barge, the plaintiff failed to properly prove its damages and was awarded only RM50,000. Notably, despite succeeding on liability, the plaintiff was ordered to pay costs after rejecting reasonable Calderbank offers, underscoring the risks of pursuing litigation without properly substantiated claims.

Read More »
14 July ,2026 No Comments

JURISDICTION – BILLS OF LADING – BREACH OF HIMALAYA CLAUSE – BREACH OF EXCLUSIVE JURISDICTION CLAUSE – ONEROUS OR UNUSUAL TERMS

In Maersk Guinéa-Bissau SARL v Almar-Hum Bubacar Baldé SARL [2026] 1 Lloyd’s Rep 215, the English Commercial Court held that a shipper was liable for breach of an exclusive jurisdiction clause and a Himalaya clause after commencing proceedings in Guinea-Bissau instead of England. The Court confirmed that such clauses are standard and enforceable, and that commencing foreign proceedings in breach of them can give rise to a claim for damages. Notably, the Court also recognised that Himalaya clauses may be used offensively, allowing subcontractors to recover losses caused by wrongful litigation. The foreign judgment was not recognised due to lack of jurisdiction and denial of natural justice.

Read More »
14 July ,2026 No Comments

DELIVERY WITHOUT PRESENTATION OF BILL OF LADING – LOI WON’T SAVE YOU: SHIPOWNER LIABLE FOR MISDELIVERY DESPITE INDEMNITY

In United Overseas Bank Ltd v The “Maersk Katalin” [2026] 1 Lloyd’s Rep 18, the Singapore High Court reaffirmed that delivery of cargo without presentation of original bills of lading remains a fundamental breach, even where carried out against letters of indemnity. The Court held that LOIs merely shift commercial risk but do not authorise misdelivery, and rejected arguments of consent, ratification and causation. Significantly, the Court emphasised that the burden lies on the carrier to prove that the loss would have occurred in any event – a burden not easily discharged. The decision underscores the continued strict liability regime in misdelivery cases, particularly where banks as bill holders are involved.

Read More »
14 July ,2026 No Comments

CONTRACT LAW – ‘UK COURTS’ MEANS ENGLAND: COURT UPHOLDS JURISDICTION DESPITE VAGUE CLAUSE

In SMT Global Logistics Ltd v Georgian Airlines LLC [2025] Lloyd’s Rep. Plus 89, the Commercial Court held that a clause referring disputes to “the court in accordance with current legislation of the United Kingdom” was a valid jurisdiction clause in favour of the High Court of England and Wales. The Court also confirmed that the Montreal Convention does not apply to pure contractual claims for non-performance, such as repayment and loss of profits. Emphasising a broad and commercially sensible interpretation, the Court enforced the parties’ choice of forum and refused to stay proceedings, reaffirming that jurisdiction clauses will be upheld unless there are overwhelming reasons to depart.

Read More »
14 July ,2026 No Comments
en_USEN
zh_TWZH ms_MYMY en_USEN