Contestation over the minimum wage in the Malaysian hotel sector: Spotting the elephant in the room

Gan Joo Ee

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This article examines the wage restructuring in the hotel sector pursuant to the minimum wage policy in Malaysia. Hoteliers sought to convert all or part of the service charge into basic wage in order to comply with the minimum wage rate — a permissible practice under the National Wage Consultative Council’s Guidelines on the Implementation of the Minimum Wages Order 2012 (‘MWO Guidelines’).This practice would not result in a real increase of an employee’s total wage. In Crystal Crown Hotel & Resort Sdn Bhd v Kesatuan Kebangsaan Pekerja-Pekerja Hotel, Bar & Restoran Semenanjung Malaysia (‘Crystal Crown case’), the High Court approved the Industrial Court’s award and declared the practice unlawful and the MWO Guidelines non-binding. It is argued that the MWO Guidelines were dismissed lightly (in the Crystal Crown award and other claims heard after it) because the Industrial Court had not considered the financial implications and the effect of the awards on the Malaysian economy — which the Industrial Court was required to have regard to, pursuant to s 30(4) of the Industrial Relations Act 1967. Although empirical studies are inconclusive on the negative impact of minimum wage on employment, it is argued that the MWO Guidelines could have been interpreted in a different light had the Industrial Court considered the socio-economic impact of the minimum wage, as required by s 30(4). With the Crystal Crown case affirmed by the Court of Appeal, and the MWO Guidelines declared ultra vires in Shangri-La Hotel (KL) Bhd & Ors v National Wages Consultative Council & Ors; it would appear that hoteliers have suffered an irreversible defeat. However, there are avenues to minimise the impact of the Crystal Crown case. Notably, rising labour cost from implementing a Crystal Crown-compliant wage structure can be partially offset by reducing the non-wage components of an employee’s total remuneration package. From this perspective, the significance of the Crystal Crown case is much diminished.
Original languageEnglish
Pages (from-to)ix-xxiv
Number of pages16
JournalMalayan Law Journal
Publication statusPublished - 2019

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