A three-member bench chaired by Nallini Pathmanathan also said the minimum wage must come from employers and cannot be paid from the service charge fund.
In dismissing the appeal by Crystal Crown Hotel and Resort Sdn Bhd, Nallini said minimum wage was defined as basic salary and cannot include the service charge.
The dispute between the hotel and the National Union of Hotel, Bar and Restaurant Workers Peninsular Malaysia arose as the former insisted on using the service charge to pay the mandatory minimum wage.
Both parties were negotiating the collective agreement for October 2011 and September 2014 and one issue that came into dispute was the incorporation of the service charge in employees’ minimum wage.
The Industrial Court, the High Court and the Court of Appeal decided against the hotel and the union did not contest the leave application before the apex court as the issue raised was of public importance.
Today, the bench held that under the National Wages Consultative Council Act 2011 and the Minimum Wages Orders (2012–2020), hoteliers were not entitled to use part or all of the employees’ service charge to satisfy their legal obligation to pay the minimum wage.
The panel, also consisting of Mary Lim Thiam Suan and Abdul Rahman Sebi, held that employers could not use service charge to top up the minimum wage.
Service charge is a charge over and above the cost of goods or services imposed by business in a bill. This is normally applied in the hospitality industry and the normal rate is 10%.
This charge accumulates to the establishment imposing the charges and is pooled into a fund to be paid to workers in the industry.
Nallini said the hotel could not complain that its costs had increased several fold and then go on to insist that a contractual benefit in the form of service charge be appropriated and used to assist it, in meeting its mandatory statutory payment obligations.
She said service charge, being money collected from third parties, did not belong to the hotel and was held in trust by the hotel.
Nallini said the bench was aware of the effect of the Covid-19 pandemic to the hotel industry but the present appeal dealt with wages relating back to 2012.
“We are answering a legal question relating to the construction of the minimum wage legislation and our answer must be in accordance with accepted principles of law,” she said.
In an immediate response, union general-secretary Rosli Affandi said today’s ruling would benefit about 110,000 workers though they may not be union members.
Lawyer N Sivabalah represented Crystal Crown while Ambiga Sreenevasan, Shireen Selvaratnam and Lim Wei Jit appeared for the union.