PETALING JAYA: Consumer groups and restaurant associations are at loggerheads over whether service charge should be levied on customers, with the former calling for more stringent regulations.

Federation of Malaysian Consumer Associations (Fomca) secretary-general Datuk Paul Selvaraj said a service charge was justified if it was regulated by a collective agreement (CA) between the employer and employees.

“The problem now is that almost every restaurant slaps customers with this charge, and the money doesn’t go to the workers,” he said in an interview.

“There has to be a clear-cut policy in place, where at a glance the consumer knows how much he will be paying.

“Businesses already factor their fixed costs in the prices so the owners should not be pocketing a further 10%.

“The service charge needs to be regulated, and the view that if you put up a sign outside your shop you have fulfilled the requirement is wrong. There needs to be a collective agreement in place before charging the 10%.”

He said consumers were irritated and confused as to why they have to pay a service charge and why the 6% Goods and Services Tax (GST) is imposed on the service charge as well.

Selvaraj also said that paying a service charge or leaving a tip should be at the discretion of the consumer.

He added that it did not make sense for consumers to pay a charge if the service was bad.

However, restaurant associations are clamouring for the service charge to be imposed.

Malaysian Muslim Restaurant Operators Association president Noorul Hassan said while most mamak restaurants did not collect a service charge, a few higher-end ones did.

“The operator does no harm in collecting this, as the customer has the expectation of better service at the outlet.

“Malaysians need to understand that everything involves a workforce and the charge provides an incentive for workers to do better for customers.

“If the service is found lacking, customers can go elsewhere – that is their right as a consumer.”

Malaysian Indian Restaurant Owners Association president Muthusamy Thirumeni agreed that tips would encourage better service.

However, he urged those imposing a service charge to comply with the Government’s new rule until further regulations were issued.

“Let us not create more confusion or frustration. People are becoming more particular as a result of the GST,” he said.

Fomca deputy-president Mohd Yusof Abdul Rahman suggested that restaurant and hotel owners have their collective agreement (CA) endorsed by the Domestic Trade, Cooperatives and Consumerism Ministry before they impose a service charge.

Mohd Yusof said once the CA was endorsed, the ministry could issue a notice which the owners could then display to their customers.

Since the implementation of GST on April 1, Mohd Yusof said Fomca had received over 100 complaints on the matter.