On 24 March 2021, the Federal Court in Crystal Crown Hotel & Resort Sdn Bhd (Crystal Crown Hotel Petaling Jaya) v Kesatuan Kebangsaan Pekerja-pekerja Hotel, Bar & Restoran Semenanjung Malaysia (Civil Appeal No. 02(f)-4-01 of 2018) ruled that the hoteliers cannot utilise the service charge imposed on bills to customers to meet the statutory minimum wage of their employees.
In this case, the hotelier had modified the wage rates of its employees by utilising the service charge element through the application of the service charge as part of the employees’ basic wage so as to meet its statutory obligation to pay the minimum wage.
The Federal Court’s decision therefore has a serious impact on the hotel industry, being one of the most significantly impacted industries during the COVID-19 pandemic. This Update seeks to provide a brief analysis of the grounds of decision by the Federal Court.
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