GWU warns against service charge replacing fair pay

The General Workers' Union has warned against service charges becoming part of catering workers' pay, after a rise in restaurants adding a 10% fee to customer bills.

The union said wages, working conditions and employment benefits should remain the direct responsibility of employers, and should not depend on extra charges imposed on customers.

According to the GWU, a mandatory service charge would also amount to an indirect price increase for consumers, who would end up paying not just for food and drink but an additional fee, at a time when many households are already under economic pressure.

The warning comes amid growing reports of restaurants and other food establishments adding a 10% service charge to bills. The Association of Catering Establishments (ACE) has also said publicly that any service charge should benefit workers, a position the GWU shares.

Last week, MaltaToday spoke with an MCCAA spokesperson who said restaurants are obliged to inform clients of any service charge before they even place their order.

“Consumers should be clearly informed of any applicable service charge before placing their order, so that they are aware of the total charges that may apply and can make an informed decision,” an MCCAA spokesperson told MaltaToday.  

Charges billed as discretionary or optional don’t get a pass either; those need to be disclosed too, the spokesperson said. Slipping a charge in without warning “may raise concerns under the provisions relating to unfair commercial practices”. 

The union also raised concern over how a service charge could affect tipping. If diners see a mandatory charge already added to their bill, they may assume staff are being compensated adequately and reduce or stop tipping altogether, potentially leaving workers worse off than before.

This risk, the GWU said, is greater without a clear mechanism guaranteeing that all funds collected through a service charge reach the workers who provide the service.

The union called for a clear and transparent regulatory framework to ensure any money collected as a service charge is fairly administered and distributed to workers, without ambiguity or differing interpretations between establishments.

They said that a few months ago, discussions emerged about lowering VAT for restaurants to 7% to boost the sector. "That measure didn't happen, and some wonder if the service charge aims to fill the gap it would have left."

The GWU insisted that any change affecting workers, consumers or the hospitality sector should follow serious consultation with social partners, rather than measures that create further uncertainty. Decent wages, better working conditions and effective protection for workers should remain the priority, it said, alongside a fair balance with consumer interests.

The union added that it will continue to monitor developments and reaffirmed its commitment to defending workers' rights, ensuring that any decision taken is fair, transparent, and in the best interests of both workers and the public.