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Service Charge in Malaysian Restaurants

Service Charge in Malaysian Restaurants

Tipping isn’t customary in Malaysia, but in some restaurants, a rather questionable service charge sure seems to be. Editor Chad Merchant takes a closer look at this practice and wonders just who’s really getting served.

The bill seemed a bit higher than expected, so I glanced at the itemization and found the offending entry. Service charge 10% – RM16.50. I’ve lived here awhile now, so I’m quite accustomed to this nefarious addition. But some places charge it, some don’t, some charge 5%, and there seems to be no rhyme nor reason to what prompts its inclusion.

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I must point out that, as an American, I’m well used to tipping 15 to 20% back home, a customary practice that is actually coming under increasing pressure as more diners question why they’re expected to effectively pay the incomes of servers who are woefully underpaid by their employers. (Restaurants typically pay an embarrassingly paltry $2.13 per hour to tipped employees and expect that they will earn the rest of their income from tips.) The state of affairs in my home country notwithstanding, suffice it to say that, because of my familiarity with rather higher rates of tipping, I’m not opposed to paying a 10% service charge – if I ever got some actual service to go along with it!

But I say here, as Shakespeare’s Hamlet expertly put it, Aye, there’s the rub.

So did we get RM16.50 worth of service for our meal? Indeed not. In actual fact, it was really a self-serve buffet of sorts. We had barely any interaction at all with the staff apart from telling someone what we wanted, then flagging them down later for a bill. No one checked on us to ask how everything was, nothing beyond the initial plates were brought to us, and I even had to get up and go track someone down to ask for salt and pepper since no one ever came to the table.

When we talk with expats and read the results of surveys we conduct, driving here tops the list of complaints every time. But the consistent runner-up is the lack of service standards, even in what are ostensibly five-star establishments. And despite this, there’s that mandatory 10% service charge… whether the service is good, bad, indifferent, or non-existent.

So why do only certain restaurants tack this charge onto their bills? I get as much service at the dry cleaner or the hardware store or even at my auto mechanic’s garage, but they don’t tack on an extra 10% to their stated prices. Even among Malaysians, there is growing dissent regarding these mandatory service charges. The Ministry of Finance have actually been petitioned to disallow businesses this practice, but they have said that since the service charge is not a government tax, they have no authority to prohibit it, adding that the service charge is a negotiable cost between the company and the customer. In line with that, some have questioned it, and some have refused to pay it, particularly when the service has been poor.

For me, it’s not an issue of cost, but rather of integrity. If the service charges being collected were distributed to the service staff (and if I received even decent service), I’d have no problem with this charge. But here, more often than not, service staff are neither knowledgeable nor empowered, seldom are well-trained, and the level of service is correspondingly poor. Beyond that, wait staff in Malaysian restaurants often comprises foreign workers who are scandalously underpaid to begin with, and when the restaurant forces a service charge on its customers and then keeps that money for itself, well… I have a real problem with that.

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There is plenty of anecdotal evidence that, in at least some cases, the servers do not get the service charge. Apart from what I’ve found by researching the subject online, I’ve asked numerous servers in restaurants that levy the charge whether or not they receive any of this extra income. The answer is always the same: no. To me, this is outright theft – from the wait staff and from the customer. It’s dishonest to tack on a service charge and then not distribute it to those who are providing the service. That’s no longer a service charge, it’s simply an spurious extra profit charge for the business, and it disguises the true cost of the food and drink you’re ordering.

So readers, have you ever questioned or refused to pay a service charge in a restaurant, either because the service was lousy or because you found that the money went only into the business’s coffers? I’d be interested to hear about it, if so. With the upcoming GST rollout, people will be scrutinizing everything, so I wouldn’t be surprised to see more being written about this easily abused service charge levied by so many restaurants. In the meantime, eat well, drink well, and take your 10% lumps when you feel they’re appropriate!

Read This: Malaysia’s Controversial Service Charge

Source: The Expat Magazine March 2015

Comments

Ada Tooda

To add pain to consumer. The service charge is being charged with GST and guess who paid it ? We the consumer. We are forced to pay tips by Restaurants in form of Service Charge and for that government is charging us on the tipping also. How fair is that.

Daniel J S Macqueen

And now the so-called Service Charge attracts a 6% GST as well! How insulting! I think it is better to refuse to pay the SC, have it deducted from the bill and then give he cash to the waiter

Medrano Double

10% service charge tsk tsk tsk tsk

Ibrahim Lamri

actually we are paying the service charge tht was not provided to us…….it become like a custom for restoran……..furher more it is more the the govn tax….

Sherena Razaly

I think the writer of this article over-generalizes… In most high end restaurants and hotels, the service charge collected is paid via the monthly paycheque to the service & kitchen teams. Especially for permanent staff. The exception is part time staff, as they come and go, and usually have the duties of a runner (clears tables and re-sets table for the next customer) and has little to no interaction with the customer. However, this is not usually applicable at the mamak or small cafes yah! I can’t speak for them, but I know that in hotels (they have a union, you know!) and in your big restaurants, the staff would leave if they didn’t get their service points every month.

Perhaps the writer had been interviewing part time staff, usually foreign labour and mostly illegal?

Ong Phaik Kim

Before the implementation of service charges, we tip! Unfortunately the noble idea of standardize tipping had being hijack by bosses who pockets more than 70% service charges collected! Leaving crumbs for staff.

Time to stop the service charges n let customers gives tipping based on our services rendered!

Both tour bus driver n myself never get a single cent tipping you guys paid when purchase tour packages!

My tipping comes from happy tourist direct! Not those you pay to tour company. In fact some tour company make illegal forced deduction of rm30 per assignment from my guide fee as file fee or admin fee. A form of undertable money for logistic staff n marketing staff!

When I point out it is illegal to make deduction without written consent under Labour Law. The travel agent staff said oh there goes my kopi o money – bribery money!

Derrick Warm

Well, I think as Malaysian, when I walk into a restaurant, what I want is mainly the food and chat with my friends. Frequent greetings (it is fake) from the waiters for me is a form of rude interruption. Please leave me and my friends alone. Well, this is my personal opinion.

Chris Chin

Actually I am quite agreeable with tipping waiters/wattresses/bellboys etc in restaurants and hotels if they do away with svc charge. In Malaysia one must understand that svc charges collected doesn’t necesarily end up with the service staff. Thus it is far better to outlaw svc charge and allow for voluntary tipping by customers.

Ong Phaik Kim

Agreed with you 100%. 80% collected goes into bosses pocket

Chrissy Ng

I just bought myself a meal at a restaurant, I was charged 10% service charge and 6 % GST, isn’t the 10% service charge not applicable anymore, with implementation of GST, why ? Is this right who can answer

Ong Phaik Kim

You don’t have to pay GST on the service charges! The service charges does not have local standing under the law. Another word it is not gazetted under the law. Go n ask for refund! You only enrich the bosses with extra 6%!

Sherena Razaly

Ong Phaik Kim, you are mistaken. GST is payable on the service charge too. If in doubt, please refer to an accountant who is servicing an f&b establishment ☺️

Jennifer Weddle Liu

I’ve been here 9 months now and can only think of a few times I’ve been really ticked off by servers. Find a few places you love with great service and just go there. El Cerdo on Changkat is great food with great service! Chilli’s is usually pretty good- a manager usually checks on your table at some point. Although almost everywhere we eat we have to request the check.

Rhys Brown

Should be gone now… Legally you do not have to pay unless it’s explained before you order…

Roland Jaudin

Guess I only took notice of the 10% last night. I did question it as I thought the only additional charge I should be paying is the GST. Am still undecided whether to pursue the matter or not. I do hope the 10% goes to the staffs.

Ong Phaik Kim

Roland only a small fraction goes to the staff. As low as rm30 per month! If the sraff did not fall sick! Or he get less. If hit sales target he might get rm300. The bulk up to 80% goes into bosses pockets!

I had witness 2 bosses fight among themselves back in 2006!

I left the corporate world in 2008! Enough of all the nonsence

Nicolas Terrien

Not worst than service u get in Parisian restaurants..

Theebah Silvadorae Silvado

Hahahahahaha….really….God Bless You!
Feel sorry for you….just shows where u come from….your background.
Just bear in mind…..you are living in KL 😉 Just Saying!!!
Good Luck!

Nasrullah Ahmad Achakzai

Nurul Huda Mohd Daud diam ..faham x ?

Vinicius Silvado

Malaysia has one of the cheapest food you can find anywhere in the world, and besides that, you can find all kinds of cuisine at a very reasonable price and usually good quality. However, the service is usually bad due to the high number of immigrants hired to be waiters, not being well trained, nor knowing the language..
I just find that no foreigner has the right to complain so bad about a country that is not yours, as I saw in some comments. If you are not happy, go back home!

Waqas Qazi

Most waiters are working part time students to make ends meet

Jason King

I’m not going “home”…this IS my home, but there is NO excuse for treating a paying customer (regardless of race or religion) as most establishments treat us in Malaysia. If a business owner hires immigrant workers, then they have the responsibility to train them. Overseas employees are common in most/all countries when you visit food/hotel establishments….but this is not used as an excuse for poor service.

Rhys Brown

Vinicius everyone has a right to their own opinion and voice… The fact is Malaysian customer service has a long way to go before it’s even close to acceptable…

Vinicius Silvado

I totally agree with you guys! there is a huge lack of training everywhere, from courtesy to using credit cards… I also dont agree w hiring underpaid immigrants..but on the other hand, Malaysia has one of the cheapest and widest variety of food, besides 24-7 restaurants, sth that u dont find in most of countries. My comment was meant to some racist comments, and for others about foreigners that come here and only complain about everything…

Ronald Hazelzet

‘Go home’ is the cheapest and lowest argument. If I’m away from home I’m entitled to voicing the good and the bad that I encounter. And who defines my home? My skin color? My passport? Where I pay most of my taxes? Where my love lives? Where I feel fine? Where I happen to be? I define my home. I decide what I say. I’m not gonna say only sweet stuff because someone reckons I’m not at home. That’s a problematic approach, dude!

Chris Chin

As a Malaysian, I welcome critism from foreigners on services received by them while in Malaysia, be it positive or negative critism. It is only thru’ critism that we can improve ourselves.

Vinicius Silvado

Critics are always good.. It can make things better..
But there was a comment in this post, that has already been deleted, making nazi comments about ppl here.. Saying they r one of the worst in the planet, this n that.. My comment was mostly to these kinda ppl.. Anyway i just dont agree w those ppl that only complain about things here and expect it to b exactly like their own home. if they want it to b like their hometown, then go back lah 😉 dont just complain, appreciate the diversity!

Medrano Double

Goin home is not the solution. They to improve their services

Tammy Gallamore

Not happy about the service and paying 10% when the person serving most likely does NOT receive this?

Amir Karimian

Vinicius you accuse people of making racist comments and your comment is the most annoying in the first place! I can see that you are super excited with the cheap mamak (don’t eat everyday or you’ll end up with high cholesterol and diabetes) and women. Wait until the dust settles down then see if you can be more enthusiastic about service here. Don’t be so cheap.

Theebah Silvadorae Silvado

Wow!!! Do you live here in KL??? You seem to have a lot of opinion abt Malaysia?

Karen Ann Donald

Alex Zotov no one is arguing the food isn’t good or reasonably priced ? But paying a service charge and getting terrible service is wrong.

Alex Zotov

Malaysia is country of reasonably cheap food. Take for example UK – mother of all angry foreigners – all kind of charges there for all sort of things – you get that non-defrosted! shepherd pie in pub – just out of microwave with piece of ice inside – price is redicoulous of course! Can not compare lah! 😛

Shaun Khee

Refuse to pay the whole bill then.

Jason King

Never ever left a tip in Malaysia since I moved here 2 years ago….just expect [email protected] service and you won’t be (too) disappointed. Thankfully, the food is amongst the best you can get (as long as you can handle your dessert being served 30mins before your main course!)

Alan Cole

Or indeed the main course turning up minus some parts which will arrive when everything else is either long eaten or cold.

Ong Phaik Kim

What do you expect from foreigner working in the service industry! In the old days for health reason foreigner not allowed in this sector! But now….

Alan you r lucky your food came. I seat for an hour nobody came to take order. Saw some staff talking among themselves. Approach them n the Myanmar supervisor told me cannot wait can leave! I screw him upside down n file a complain! If I am not there for a meeting I will walk out of Old Town coffee in Central Market. End of the day I did not order anything!

My boss wonder why I tell the supervisor off! Now I don’t eat out less stressful.

Eli Camp Camp

One of the worst I’ve experienced in my life…

Sukan Jaruyothin

I have never refused to pay for the service charge but since been living in KL, I wanted to refuse to pay as there is no such thing existed here

Maevis Chang

… and it’s considered legitimate daylight robbery..

Maggie Lim

Service in Malaysia is lousy.

Ong Phaik Kim

Because

1) Foreigners invade the restaurant industry from 2008! Before that this due to health reason foreigner not allowed in this sector! I too wait for an hour for order. Approach 3 staff talking among themselves! The Myanmar supervisor turn round n told me Cannot wait can leave! Hello I waited for an hour lei!

This I blame on Home Ministry who issue work permits under immigration!

2) All service charges or tipping – the bulk ends in the bosses pockets!

Alan Cole

Malaysia is mainly a place of miserable Customer Service. I don;t think businesses have to try because Malaysians seem to accept s**t service as the norm. It’s always a relief when my server turns out to be from the Philippines. They know service!

Lee Justin Castillo

Dome cafe malaysia, great food, filipino staffs

Ong Phaik Kim

Because your tipping in the form of service charges the bulk almost 70 to 80% collected goes into the bosses pockets! Not the staff who served you!

End of the month some of them get minimum rm30 for whole month of serving you! If he fall sick, deduction on number of days not working! He get less than rm30! If hit sales target he might get rm300 if he did not fall sick!

This is the very reason I am vocal n against service charges! At least whatever small change you left on the tables are divided equally among the staff end of the month

Ong Phaik Kim

Besides the bosses uses service charge to pay peanut basic salary. EPF conttibution calculate on basic pay n not total income as stated under EPF and Labour Law! This happen because of workers ignorant of their right

Either way service charges had short change the workers!

Alan Cole

Sad world, people not paid a living wage

Ong Phaik Kim

Now you know. How the service industry staff get the worst end of the stick! Now locals are edge out into the street with cheap foriegners labour taking over their jobs!

Foreigners are flavoured because No epf. No socso. No medical benefit. No annual salary increament! Forever rm900 minimum salary!

Beside uneducated foreigner easy target for bully from bosses to police to taxi drivers in the form of extortion! They look for me to send them to airport when their work permit expired! Even at 3am in the morning!

Tammy Gallamore

So just refuse to pay the 10% as we are most certain that it does NOT go to the staff?

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