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?

Definition of minimum wages

Definition of basic wages

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

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