Asian Food Worker Frontpage
Nepal Hotel Workers Claim Victory: Agreement on Service Charge Implementation
Unions representing hotel, catering and tourism workers in Nepal secured in January 2007 through a bipartite agreement for a phased introduction of a 10 percent service charge in 2007 and 2008. This follows upon more than five years of intense opposition by Nepal’s hotel owners, prominent among them members of the royal family.

Key Points of Service Charge Agreement:
• 200,000 workers and families benefit;
• From Jan 1, 2007 10% on all services in hotels and restaurants, except accommodation;
• From Jan 1, 2008 accommodation will be included in service charge.
• Of service charge collected, 68% share will go to workers, 32% retained by owners.

The service charge will operate in hotels and restaurants and will benefit an estimated 200,000 workers and their families in the industry. The agreement was reached between the hotel owners group (Hotel Association of Nepal, HAN) and a joint grouping of five unions representing hotel workers (including the IUF affiliates Nepal Tourism & Hotel Workers Union, NTHWU, and the Nepal Independent Hotel Workers Union, NIHWU). The service charge will be divided between a 68% share going to workers and a 32% share being retained by the owners. For 2007 the service charge will apply to all services in hotels and restaurants except accommodation, from January 2008 accommodation will be included.

IUF affiliates the NTHWU and the NIHWU first started the struggle for a service charge through a joint campaign in 2000 following participation in IUF meetings and discussions with other hotel unions, for example from Malaysia and the Philippines where the service charge operates as part of normal hotel business.

The campaign for a service charge in Nepal enjoyed massive support from rank and file trade union members, especially because a properly implemented service charge has such positive effects in terms of income for workers and their families. Moreover, the service charge plays a very important role in distributing more fairly the revenues earned in the tourism industries.

Hotel owners from the outset resisted the service charge and through pressure on the government in 2001, forced through changes in the law via the Essential Services Act to prohibit strikes in the hotel sector. Hotel unions were thus denied their fundamental rights and their collective capacities to agitate legally for change were neutered. (In 2002, following a complaint lodged by the IUF, the ILO declared the government’s action in extending the Essential Services Act to prohibit strikes in the hotel sector contrary to fundamental labour rights).

The royal coup of 2005 put workers and unions under greater pressure, but this did not destroy them. In fact, the April 2006 rebellion which overthrew the royal dictatorship was only possible because of the active participation of Nepal’s workers and trade unions. A new political landscape was opened for real change which would benefit all.

In this context securing the agreement for the service charge with HAN is a concrete result of the will and efforts of hotel workers finally being able to win their demands. This is a sign of an important change: employers in Nepal can no longer hide behind the cover of dictatorship and arbitrary power in order to deny workers their rights.

In the coming months hotel unions in Nepal will be working towards making sure the service charge is implemented properly. The task of removing the hotel sector from the Essential Services Act remains. Nepal’s hotel unions have won an important achievement, hotel unions in the region will look to Nepal to see how unions can build on these gains.

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[2007.02.02]