Hotel Biltmore and Others v Central Provident Fund Board

• Jurisdiction: Singapore
• Judge: A V Winslow J
• Judgment Date: 07 November 1972
• Neutral Citation: [1972] SGHC 19
• Date: 07 November 1972
• Subject Matter: Whether Central Provident Fund contributions were payable on these charges,Wages,Provident Fund,Section 2 Central Provident Fund Act (Cap 121, 1970 Rev Ed),Whether charges were wages under section 2 Central Provident Fund Act (Cap 121, 1970 Rev Ed),Service charges levied on customers and distributed to employees
• Docket Number: Originating Summons No 165 of 1972
• Published date: 19 September 2003
• Defendant Counsel: G Starforth Hill (Rodyk & Davidson)
• Court: High Court (Singapore)
• Plaintiff Counsel: M Karthigesu and N Logaraj (Allen & Gledhill)

The question raised in this originating summons is whether payments of certain moneys distributed to the applicants` employees on a points or share system, out of the service charges (5 to 10%) levied on all their customers are `wages` as defined in the Central Provident Fund Act (Cap 121, 1970 Ed) ie remuneration in money due or granted to them in respect of their employment, and if so, whether the applicants are liable to make Central Provident Fund contributions on such payments.

Counsel for the applicants submitted that these payments are non-contractual payments as between the applicants and their employees and accordingly are not wages within such definition. Mr Ruosch, Vice President of the Singapore Hotel and Restaurant Association, comprising 37 licensed hotels in Singapore, representing all the ten applicants herein, said that these service charges are gratuitous payments made by customers to the hotel whose payment is eventually enforced on failure to pay after having been solicited in the first instance. Apparently the object of introducing the service charge was to do away with tipping which ordinarily exists on a direct personal contact basis as between customer and employee for services rendered by the employee arising out of and in the course of his employment as such. It should be noted, however, that the deployment of the service charges collected by the applicants is not confined to employees with whom customers come into direct contact.

Mr Karthigesu stressed that these payments were purely voluntary, that they did not arise out of any contractual relationship between the applicants and the employees to whom they were paid, that they arose from moneys paid by a third-party (the customer) for the benefit of the employees and were accordingly not wages within the definition so as to attract Central Provident Fund contributions.

Counsel also emphasised caution in extracting principles from the tax cases cited because the latter were concerned with the income of an employee and not with wages paid by an employer. He directed attention to the fact that s 52 of the Industrial Relations Act (Cap 124, 1970 Ed) deals with the recovery of awards of the Industrial Arbitration Court made in respect of wages or otherwise and that the matters which the Industrial Arbitration Court took into account in exhs MR1 and MR2 (awards in Industrial Arbitration Cases nos 36/1970 and 25/1971 Food, Drinks & Allied Workers` Union v Hotel Malaysia...