Cheaper dining out in Malaysia?

The move will not only bring cheer to consumers but also workers because the proposed new legislation seeks to make sure that any money collected for service will rightly be channelled to the employees.

 

The tougher laws are being introduced to clamp down on restaurants and hotels for imposing up to 10% service charge of the bill on their customers despite them not meeting the condition to do so.

 

The Domestic Trade, Cooperatives and Consumerism Ministry is in the midst of coming up with new rules that enable it to take action against such premises that charge for service although they do not have a collective agreement (CA) with their employees.

 

Before the 6% Goods and Services Tax (GST) replaced the Sales and Service Tax on April 1 last year, the standard practice was to charge 10% for service and a 6% government tax on the original price.

 

After the GST was implemented, the Government repeatedly reminded operators that only those with a CA between employer and employees could impose a service charge.

However, many restaurants, despite not meeting the condition, continue to flout the rule.

According to the ministry, there are only 93 companies in the hotel and food and beverage industries that are eligible to impose the service charge.

A check by mStar Online has found that four popular restaurant chains, with some 500 outlets nationwide, charge 5 per cent or 10  per cent for service despite not having a CA in place.

The ministry’s secretary-general Datuk Seri Alias Ahmad (pic) said that it has since last year required business owners to display the service charge notice to inform their customers.

“However, not only those who qualify are doing that, all businesses do that these days.

“I don’t think a normal eatery has a CA because logically, they do not have a workers’ union,” he said in an interview with the Malay news portal.

Alias said that due to a lack of specific rules to enforce the ruling, business owners continued to arbitrarily display the notice and charge their customers for service.

Under the Price Control and Anti-Profiteering Act 2011, it is an offence for premises to not display the service charge notice.

If convicted, individuals can be fined up to RM100,000, be jailed up to three years, or both, while companies face a penalty of up to RM500,000.

The proposed new rules will strengthen enforcement and provide more protection for consumers and workers.

“We have asked our legal advisers and the enforcement team to draft the laws and look at the existing regulations.

“We need to look deeper into this matter as it also involves the Human Resource Ministry and other agencies,” said Alias, noting that the CA used by workers’ unions was recognised by the Industrial Court.

The new rules, he said, involved an amendment to the Consumer Protection Act.

“As it requires an amendment to an Act, it needs to be tabled in Parliament, most probably in the fourth quarter of the year,” said Alias, adding that the proposal would be presented by Minister Datuk Seri Hamzah Zainuddin to the Cabinet before being tabled.

If all went well, the new rules would come into effect early next year, said Alias.

The new rules, he added, would enable the ministry to check if businesses were entitled to impose the service charge.

“These rules will also enable the ministry to check if the employers are distributing the service charge to their workers.

“If employers or companies fail to do so, the ministry can take stern action based on the laws,” he said.

However, there is yet to be discussion on the penalties for offenders.