Tag: service charge

Resort workers rally for ‘living wage’

Resort workers staged a rally in Malé today calling on the government to set a US$600 minimum wage and to pass a trade union law to allow collective bargaining.

The Tourism Employees Association of Maldives (TEAM) organised the rally after collecting about 7,000 signatures on a petition with five main demands.

“Our campaign calling on the government and resort owners to fulfil our demands will go on, even if, in the process, resorts become unable to operate,” secretary general of the TEAM, Mauroof Zakir, told Minivan News at the rally.

TEAM has circulated the petition in more than 70 of the Maldives’ 108 resorts since April. More than half of the 11,426 Maldivians employed in the multi-billion dollar industry have signed the petition.

The other demands include a mandatory 12 percent service charge, resort shares for workers as pledged by the president, and an 80 percent quota for Maldivians in the tourism industry.

Mauroof said TEAM will present the petition next week to the president’s office, the parliament, the tourism ministry, the economic ministry, the attorney general’s office and the youth ministry.

TEAM has previously warned of strikes if the government does not heed the demands.

About 50 resort workers joined the rally at the artificial beach today. Mauroof said TEAM was satisfied with the turnout and had not planned for most workers to take leave at the same time.

Protesters wore red T-shirts with the demands printed on the back and draped banners that read, “Sustainable tourism = living wage for tourism workers” and “Unfair dismissal = unfair tourism.”

“Our rights are being taken away. Resort owners discriminate between Maldivians and foreigners,” a resort worker at the rally, Abdulla Jaleel Ibrahim, told Minivan News.

“[Foreign workers] get leave to go visit their families whenever they want or to bring them to the resort with a holiday package, whereas local employees have to wait up to eight months even to get a leave. We are not allowed to bring our families there either.”

Adam Hamdhy, who has been working in the tourism industry for 13 years, said resort owners did not care about local staff employed in low paying jobs.

“They don’t care about how room boys and waiters may have to live. I am truly disappointed to note that local resort employees in higher positions are working against the TEAM’s campaign and their colleagues in lower positions,” he said.

Jumhooree Party MP Ali Hussain also attended the rally and encouraged the resort workers not to give up hope or lose focus.

Hussain vowed that he would submit legislation on industrial relations if the government does not heed the demand.

Deputy tourism minister Hussain Lirar previously told Minivan News that the government will consider the petition.

“The industry consists of a lot of stakeholders, not only TEAM. We will have to hold discussion with all of them before implementing new regulations,” he said.

The Maldives does not have a policy on minimum wage and setting one will require an amendment to the Employment Act. Current laws meanwhile require 50 percent of resort employees to be local, but the rule is not widely enforced.

Preliminary figures from the 2014 census indicated that foreign employees amount to 59 percent of all tourism employees, with 16,342 expatriate workers.

According to TEAM, US$358 million is transferred out of the country as wages for migrant workers annually.

Mauroof previously said that implementing the quota would help achieve the current administration’s pledge of creating 94,000 new jobs.

Providing shares in resorts to their rank-and-file employees was a campaign pledge of President Abdulla Yameen. Most resorts in the Maldives are owned by private companies and controlled by a few wealthy individuals.

In February 2014, President Yameen said that by the end of the year, a number of resorts would be floating a portion of their shares to the public, and urged Maldivian employees to become shareholders.

Last week, tourism minister Ahmed Adeeb said the government will announce a model for offering shares to workers before the end of the year.

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TEAM fears resort workers’ income may be indirectly affected by T-GST rise

The Tourism Employees Association of Maldives (TEAM) has expressed concern that certain resorts are planning to reduce service charges in the wake of the proposed increase to the Tourism Goods and Service Tax (T-GST).

“While the decision to increase Tourism General Services Tax (T-GST) is going to increase the government’s income, some resorts are trying to reduce the percentage of service charge collected from tourist for the resort workers; this is very concerning and unacceptable for our association,” read a TEAM press release today.

Earlier this month the People’s Majlis agreed to revenue raising measures which involved increasing T-GST to 12 percent in order to help finance the government’s record MVR17.95 billion budget.

“Even now, in most resorts, the services charge collected from tourists are not distributed according to law, and they are sometimes spent by the companies; the Tourism Employees Association of Maldives is very concerned about this as well,” said TEAM.

An employee of one of the country’s top resorts explained that current legislation mandated that 10 percent of service charge must be taken for staff, and one percent used for additional staff costs.

“But the current legislation doesn’t specify that the service charge has to be distributed equally,” said the employee – who preferred to remain anonymous. “There are a lot of loopholes.”

The trade union today called for the government to establish a comprehensive legal framework that regulates the payment and disbursal of service charges.

“Service charges and monthly wages and other allowances are privileges that should be sustained through bargaining through an agreement between the employer and and the employed,” said the union.

Workers at the Sheraton Full Moon resort went on strike last month, citing low service charge as one of the reasons. Local reports suggested that Sheraton’s staff were being paid less than one third of the amount made by fellow-workers in similar resorts from service charge.

One general manager, however,  told Minivan News that he felt TEAM’s fears were unfounded, suggesting that comparison with other resorts was a major reason for keeping staff benefits competitive.

“We need to keep staff happy in order to have happy guests. It’s highly uncommon for a resort to do this – it’s just not worth it. We want to attract and keep the best staff.”

“TEAM’s logic doesn’t make sense,” said the GM, who wished to remain anonymous. “I don’t know of any resort that does anything wrong with the service charge.”

Asked about the potential impact of the scheduled changes to tourism charges – which include the reintroduction of that flat-rate bed tax until November, alongside the T-GST increase in the same month – the GM said that it was the top resorts that would be worst affected.

“Higher end resorts will be experience more of a problem after higher T-GST replaces the bed tax, and it’s these resorts which normally charge a higher service rate,” he said.

Earlier this week, IMF representatives told a Majlis committee that – even at twelve percent – the rates of taxation in the tourism sector were “quite low” compared to other tourist destinations.

Dr Koshy Mathai, resident representative to Sri Lanka and Maldives, said he had paid “north of 20 percent” in taxes at a hotel in Fiji and that, as 70 to 80 percent of the Maldivian economy was “driven by tourism”, Mathai said that it was “only natural that the [tourism industry is] contributing resources for the economy to operate.”

He added that “rates of return on Maldivian resorts are among the highest in the world”.

“The people who come here are people with more wherewithal, more financial resources, who are more likely to be price insensitive,” said Mathai.

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Police break strike at Alimatha Resort, arrest two workers

A  strike by Maldivian employees at Alimatha Resort in Vaavu Atoll ended on Friday after 30 police descended on the resort.

Two resort staff were arrested, while 27 were subsequently dismissed. The workers were striking over a demand for an increase in their service charge compensation.

“They tear gassed all the staff”: striking resort worker

Dismissed reception supervisor at Alimatha Resort, Ahmed Fayaz, told Minivan News that police arrested the leader of the striking workers.

“The police arrested our leader Hassan. We were surrounding him, saying they couldn’t take him. We were trying to keep the police from arresting him.

“If they were going to do that, we said we would be very angry, so they tear gassed all the striking staff,” he alleged.

“In peace the police went out”: Police Spokesperson Hassan Haneef

Police Spokesperson Hassan Haneef confirmed two people had been arrested and were later released without charge. Police received information from resort management and “tried to help negotiate”, he said.

“The Freedom of Peaceful Assembly act doesn’t allow protesting in resorts,” Haneef noted.

“There was no tear gas, no pepper spray, and no violence.”

“l’m not here to spell out what has been done”: Alimatha General Manager

Alimatha Resort General Manager Abdullah Nashiz told Minivan News that resort management wanted to talk and gave many chances to the striking workers.

“We explained this is not the way to make demands. We confronted and commanded them to return to duty,” Nashiz stated.

Nashiz claimed the striking workers were shouting and forced laundry operations to stop by frightening Maldivian staff in that department.

“We do not know what threats were made [by staff] beyond stopping operations. I’m not here to spell out what has been done. The police can tell you that,” Nashiz said.

“The first time, I requested the supervisor call the police for the safety and security of the clients, staff, and property, and two or three [officers] came.

“We called the police the second time because the strikers were shouting at and threatening [us]. We were scared,” he claimed.

Nashiz said that after the striking workers were terminated, they were unwilling to take the termination letters and started shouting. However, he also claimed that all 27 former staff have since signed the termination letters.

He said that 99 percent of service charges were being given to staff and that the amount of compensation requested by the former employees was “impossible” and “not within the budget of the company”.

“It’s not company policy to give the total service charge, not at the [US$300-$400] amount requested. It was not foreseen in the budget or present employment contracts.

“One part may be given this year, and the next year we can reconsider based on work performance,” Nashiz added.

Fayaz meanwhile stated that the striking staff did not want to resign, nor did they want to cause any trouble for  tourists at the resort.

“The management is not giving the right information to the media, what they’ve said is incorrect,” he alleged.

“[General Manager] Abdullah Nashiz is wrong. They did a very, very, very bad thing.

“We were not disturbing guests, or other resort workers. We were just sitting in our rooms and refusing to go work,” Fayaz said.

Fayaz said resort management did not want to negotiate with the striking employees, particularly through collective bargaining. Instead they insisted the staff keep working.

Ultimately, 27 staff were terminated and forced to leave the resort following Hassan’s arrest.

According to Fayaz, resort management charges guests 8-10 percent service charge as stated in the guest catalogue, but then does not distribute 99 percent of those service charges to employees, as mandated by law.

“We were only given US$25-$50 in service charges each per month. This is the same service charge amount employees received in 1997,” he said.

“If they were unwilling to give us the proper service charge amount, we proposed a US$300 pay increase as an alternative,” Fayaz stated.

Resort “has a history of serious problems”: TEAM Secretary General

Tourism Employees Association of the Maldives (TEAM) Secretary General Mauroof Zakir told Minivan News the union are providing consulting services to the former employees at the resort, and noted that the workers had a history of striking for wage increases.

Strikes have occurred on the resort annually since 2009 and pay has increased from MVR 1200 (US$77.42) a month to MVR3000 (US$193.55) a month in 2012, he said.

“Management has refused to the workers’ demands, because if they accede they will have to pay all the service charges from 2008 until now,” Zakir stated.

He also explained that the constitution guarantees workers’ rights and that the Maldives had ratified the International Labour Organisation covenant, which protects the right for form associations for collective bargaining.

Zakir also said police “warned” strike leader Hassan and then arrested him in his room, at which point the other striking employees held onto him to prevent the police from taking him, and were ultimately pepper-sprayed.

“The staff were  really really afraid because of the police involvement,” Zakir said.

He added that since the resort is private property, the police said the terminated employees could not stay and forced them to leave the resort.

Tourism Ministry

Tourism Minister Ahmed Adheeb told local media the “disruption of services and harmony in resorts is unacceptable”.

“Tourism is the most significant industry in the Maldives. Adverse impact on the industry as a result of such protests would directly affect the entire nation. It could also have a major effect on our economy,” Adheeb said.

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MIRA concedes profit tax challenges following door-to-door push

The Maldives Inland Revenue Authority (MIRA) has taken a door-to-door approach in trying to prepare Maldivian enterprises for the introduction of a new Business Profit Tax (BPT) that comes into effect on July 18.  MIRA says informing and registering every national enterprise in the country under the scheme will be a considerable challenge.

The BPT is to be charged to all businesses operating in the Maldives,that makes a profit  of more then Rf500,000 (US $32,425).  The tax will be a first for companies operating in the Maldives, a country that launched a similar 3.5 percent Tourism Goods and Services Tax on all travel industry income as of January 1 this year.

Business owners and industry representatives, while said to generally welcome direct revenue in the country, have called for a gradual introduction of financial reforms like the BPT, which are being sought by the government to balance national budget deficits and protect smaller enterprises.

Under the present BPT system,  businesses that make a profit of more than Rf500,000 (US$32,425) will be asked to pay 15 percent of their earnings to the state.  This sum will effectively rule out small businesses operated by individuals and places  like corner shops that mainly caters to the local residents from having to pay BPT.

Moomina Abdul Sattar, 49, who runs a small tailor service, is one such businesswoman.

“I don’t have to pay the BPT tax; it is applicable only for those who make a profit of more than Mrf 30,000 (US $ 1945) a month,” she said.

Sattar added that she had previously attended an information session held by MIRA and was not therefore concerned about the tax as it does not affect her operations.

“My income per month is around Mrf 15,000 (US $ 973), from this I have to pay the salary of my three tailors,” she said.

Nonetheless, Sattar added that she still wasn’t aware that registration of her business was required by MIRA, even after attending the meeting.

For other businesses in the country, beyond the registration process itself, BPT is still expected to provide a significant challenge, at least in the short-term.

“We are not fully ready for BPT, but we are taking it positively,” said Ibrahim Hameez, Managing Director of Ryan Pvt Ltd. A design consultancy firm, Ryan has about 40 employees and would be seen as a medium and growing business.

“A lot of things that affect businesses were introduced this year, pension scheme, BPT, Income tax,” he said.

Hameez added that it was the timing of the introduction of taxes that posed a problem. “If we had known one year in advance, it would have been better. At the end of last year, we had not foreseen and planned for all these expenses in our cash flow for this year.”

The BPT Act was published in the government Gazette on 18th January, with the tax to come into effect 6 months from the date of publication.

Despite the problem of timing Hameez believes taxation is a good thing.  “BPT is going to be tough to adjust to, but we can and we will.”

Business of all sizes

As part of the act’s requirements, businesses of all sizes, including small and medium enterpises have to be registered with MIRA. This is a first for the Maldives, where small businesses run from home have generally not had to register themselves in the country.  

MIRA says they are having great success in their door to door campaign to spread awareness.

“The response from the public has exceeded our expectations, people are very cooperative and even fill up the forms for registration on the spot most of the time” said Fathimath Rasheeda, Director of Tax Payer Education and Facilities for MIRA.

 Landlords had also previously been exempt from having to register their operations or interests.  It is these type of earners that Rasheeda has said have been the target audience for its door-to-door campaign.

“As a society we don’t tend to think that renting places, giving tuition, or selling sliced arecanuts are doing businesses,” she said.

Until this month, individuals or partnerships running small businesses like making short eats or cakes from their homes had only been required to get permission from the Ministry of Health to operate.  Similarly, anyone renting accommodation, no matter the size, had not been required to register their property unless the place in question was to be used as a shop.

“Even a person renting out one room for Mrf 2000 (US $130) or teaching a small Quran class should register. But we will be taxing only those who earn more than 500,000 (US $ 32425) annually as profit,” said Rasheeda.

 

Challenges and Penalties

Alongside businesses, MIRA also has its own concerns over such a large scale operation being conducted for the first time.

“This is a big challenge for us also, as this is the first time a lot of businesses in Maldives would be registered,” she said.

MIRA’s 70 staff will be participating in an awareness campaign set for next Saturday. While next week the campaign will be taken to the islands.

“Due to lack of resources we cannot cover all the islands, but the city and island councils have been very helpful and have helped register the businesses in the islands,” Rasheeda added.

Among the challenges faced by MIRA will be taxing businesses that had never before declared their revenues publicly.

In addressing this potential difficulty, Rasheeda added that the BPT would operate like taxation systems in most other countries, where “individuals and businesses have to declare on their own the profits they make.”

The audit department of MIRA is expected to conduct a risk analysis to prioritize the first businesses it will audit to ensure the system is being adhered to.

“We hope to audit all the businesses within a five year period.  Those businesses and individuals eligible to pay taxes will be asked to file a tax return annually,” Rasheeda added.

The penalties for enterprises omitting or filing false tax returns will include fines of up to Rf100,000 (US$6,485), six months to two years of house arrest and imprisonment or banishment, as per the BPT act.  Rasheeda added that “if businesses or individuals fail to pay their taxes, aside from the wide ranging penalties, we can also seize their property in order to get the amount owed to the authority.”

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Staff at Centara Grand strike over low service charge payments

Management at the Centara Grand Island Resort in North Ari Atoll have increased the service charge allocated to staff after workers held a strike yesterday.

A employee told Minivan News that staff from the housekeeping department, front office and food and beverage department participated in the strike from 10:00am yesterday morning to 4:30pm in the afternoon.

He said the staff held the strike because they were not receiving the service charges agreed to them by management, adding that the management had persisted in giving them the lower amount “claiming that the room revenue was very low.”

“The general manager and someone from labor ministry came and spoke to us and said the service charge would be increased,” he said.

”The general manager gave us three documents guaranteeing they would add $US300 to our service charge from this month onwards.”

He said staff would renew the strike if the management failed to follow the conditions in the document.

Spokesperson for the Ministry of Human Resources, Youth and Sports, Ahmed Shinan, said while he was unable to comment on the specifics of the incident, the ministry had received information about the case and a representative from the ministry had visited the island.

The management of Centara Grand Island Resort had not responded to Minivan News at time of press.

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