When the government introduced a new minimum wage law in 2012, the hotel employers’ association reacted by attempting to withdraw the distribution of service charge to workers and instead use service charge revenue to meet the new minimum wage requirements.
Several hotel chains – spearheaded by Shangri-La Hotels & Resorts – attempted to force changes in collective agreements to remove service charge distribution as part of hotel workers’ compensation and to retain it as revenue. This so-called “clean wage” system was in fact a dirty tactic to take money from workers to pay the difference needed to meet the new minimum wage.
The IUF-affiliated National Union of Hotel, Bar and Restaurant Workers (NUHBRW) and Sabah Hotel Resort, Restaurant Employees’ Union (SHRREU) launched a joint campaign against this wage theft, demanding that service charge continue to be distributed to hotel workers.
NUHBRW members protest wage theft in 2015
In a landmark ruling, the Federal Court has now upheld an Industrial Court decision that hotel workers must be paid minimum wages in accordance with the Minimum Wages Order 2012, over and above the service charge imposed and that 90 percent of service charge revenue be fully distributed to workers. This decision is retroactive to October 2013.