Proposed amendment to mandate service charge payment in USD

An amendment has been proposed to the law to stop the practice of converting U.S. Dollar-denominated service charges into Maldivian Rufiyaa before distribution.

The amendment also seeks to ensure that service charges are extended to employees who are permanently involved in providing direct services to tourists but currently do not receive them.

This proposed amendment to the Employment Act was submitted by Mauroof Zakir, a member of the main opposition Maldivian Democratic Party (MDP) representing Kendhoo constituency in the People’s Majlis.

Mauroof noted that businesses operating in the tourism industry are required to levy a service charge of not less than 10 percent on every service provided.

Although the law states that these funds must be distributed equally among all employees of the employer, some establishments are converting the service charge, often collected in foreign currency, into MVR before distributing it to their staff.

He argued that this practice prevents employees from fully benefiting from what the Employment Act guarantees through the mandated distribution of collected service charges.

He said the primary purpose of proposing the amendment is to fully facilitate and safeguard the right of tourism sector employees to receive service charges as entitled under the law.

The amendment submitted by Mauroof seeks to add two new sub-paragraphs after sub-paragraph (b) of Article 52 of the Employment Act.

It explicitly states that employers must not convert the currency of service charge funds collected and owed to employees into Maldivian Rufiyaa. Instead, the funds must be distributed in the same currency in which they were received.

The amendment also includes a provision emphasizing that there should be no discrimination in the distribution of service charges to employees in the tourism industry, regardless of whether they are employed temporarily or through a third party.