PETALING JAYA: Many Malaysians were not aware until the recent Goods and Services Tax (GST) was implemented that it was not compulsory to pay the service charge, which is usually 10 per cent of the total bill.
But now there is widespread outcry over the extra charge - which is taxed a further 6 per cent on top of the GST applied to the original purchase - and many are refusing to pay the amount.
The backlash was so strong that the Domestic Trade, Cooperatives and Consumerism Ministry issued a moratorium on restaurants charging the 10 per cent, which was first established decades ago in lieu of tipping.
According to Minister Datuk Seri Hasan Malek, traditionally, a collective agreement (CA) between employees and employers regulated the percentage of the service charge given to each employee.
However, many restaurants adopted the practice even without an agreement, with owners pocketing the 10 per cent for themselves and workers never seeing a sen of it.
Ministry secretary-general Datuk Alias Ahmad said the spirit behind it was for lower income employees to supplement their wages.
"However, there are restaurants and hotels which simply add the fee without a collective agreement and abuse the system by not giving the employees anything," he said, adding that the ministry was putting a stop to this now and revising their enforcement scope.
"We have a working group between us, the Human Resource Ministry and Finance Ministry to protect the rights of the consumer. We will investigate and study the matter to come up with a new law," he added.
Hasan also warned that action would be taken against restaurants and hotels that increased prices to cover the now-halted service charge.
"That is profiteering. You are allowed to make a profit, but within reason. We have a mechanism to identify this and we will crack down (on errant operators).
"If there's no agreement, we can take action."
He said the ministry would check that those claiming the 10 per cent were actually giving employees their tips.
He noted, however, that restaurants or hotels with a collective agreement were still allowed to levy the charge as it was a legally binding document.