Effective Monday (6th April), restaurants and hotels will not be allowed to impose service charge unless they have employer-employee collective agreements in place.

Domestic Trade and Consumerism secretary-general Datuk Seri Alias Ahmad said the instruction is temporary, until the Government figures out a way to regulate the collection of service charges.

The businesses, he said, were also now required to display signboards to inform consumers that they were imposing the charges.

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He said the move was made following the high number of complaints from consumers, and the ministry had already formed a working committee with the Finance and Human Resource Ministries to formulate a new policy on the matter.

“There have been restrictions in governing service charges because there was no specific act to regulate it,” he said during a press conference on the Goods and Services Tax (GST) at the Finance Ministry building here, yesterday afternoon.

“At present, there is no official body or ruling that regulates the collection of service charge. It is an age-old international practice. However, as we have received many complaints from consumers, we came to this decision,” said Alias at a press conference. He added that businesses must install clear displays if service charges are being imposed.

It is important for consumers to know what sort of service they are getting if these places are charging for service,” he said.

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He said the premises which failed to comply with the new ruling would be investigated under the Price Control and Anti-Profiteering Act 2011 provided a fine of up to RM100,000 and three years prison, and the Consumer Protection Act 1999 (CPA), among others.

Sources: The Star, NST.

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