De Duine withdraws gratuity deductions, but legal clarification still sought

De Duine Hotel in Henties Bay has formally informed the labour ministry that it will not proceed with the controversial gratuity deductions that sparked a ministry investigation and public backlash last month.In a leaked letter addressed to a labour inspector following the visit from a ministry inspection team, the hotel confirmed the retraction of its proposed tip policy and pledged to reimburse all withheld gratuities by Friday, 4 April. The letter, signed by the hotel’s owner, Nico van der Westhuizen, outlines several corrective actions agreed upon during the ministry’s recent inspection at the establishment.“We will not continue with the deductions as indicated,” the letter reads. “We already decided that the method be discarded when somehow it leaked out to the media.”The gratuity deductions – initially introduced in a discussion document that went viral – would have seen tips logged as loans and partially deducted from waiters&#039; salaries. The policy caused widespread criticism and led to accusations of unlawful employment practices.Despite walking back the plan, the hotel maintains that its original intent was in line with national tax compliance.“De Duine Hotel remains committed to both employee welfare and compliance with the labour and tax laws,” the hotel noted. “We will continue to evaluate solutions, in consultation with labour consultants, your office and the Ministry of Finance, to ensure that our approach is fair, legal and sustainable.”Clarity neededThe hotel is continuing to seek clarity from both the Namibia Revenue Agency (NamRA) and the courts on the taxation of gratuities – especially those received through electronic payments, which are increasingly common.Van der Westhuisen confirmed to this newspaper that the labour inspectors had been on site and expressed no immediate objections.“They were perfectly happy with how everything is being done,” he said.The ministry’s executive director, Lydia Indombo, said a report will be issued once the findings and a solution are available, adding: “I cannot comment further than that – let’s see what our team delivers.”The hotel also confirmed that the entire N$13 900 in previously withheld gratuities will be returned to affected staff members and that new, simplified employment contracts – drafted with assistance from a labour consultant – will be implemented today. Additionally, the hotel has agreed to improve payslip transparency and comply fully with statutory minimum wage requirements.NamRA has not yet issued specific directives on the taxation of gratuities. However, under the country’s Income Tax Act, all income – including tips – is taxable. Financial and tax advisors also suggest that gratuities form part of remuneration and must be declared and taxed accordingly.Questions raised Prominent restaurateurs interviewed by this newspaper on Friday expressed strong support for De Duine’s underlying intent, though they agreed the original draft document had been poorly worded.“They were 100% correct in their intent,” said one coastal restaurant owner. “It’s just unfortunate that the letter, which was only a draft, made it to social media and was misconstrued as an attempt to take ownership of the waiters’ money.”Some restaurateurs said their establishments pool tips and distribute them among staff, including kitchen and cleaning staff.“It is not just the waiter who is responsible for the good service,” one said. “Good food, presentation, timing – these all come from a team effort. So when service is good or bad, everyone shares in the result.”They also noted that card payments often complicate matters.“When a customer adds a tip via card, the bank deducts a service fee from the entire amount. We don’t pass that cost on to the waiters; we absorb it,” a restaurateur said. “But that means the business is losing money on gratuities – it’s actually the restaurant that is hit the hardest. This is something banks must address.”In that context, De Duine’s efforts to seek clarity from NamRA and the finance ministry were seen by some in the industry as responsible and necessary.“They’re trying to do the right thing and reduce tax risk for waiters. It just needs to be structured and worded properly. Once the process is completed, I believe it will be,” said the restaurateur.

De Duine withdraws gratuity deductions, but legal clarification still sought

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Namibian Sun 2025-04-16

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De Duine withdraws gratuity deductions, but legal clarification still sought

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Namibian Sun 2025-04-16

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