The city's highest court yesterday blocked an appeal by Wing On Travel and held that tips paid to tour guides should be counted as part of their wages when calculating claims for holiday pay.
A tour guides' union anticipated that more than 1,000 tour guides would seek similar compensation from their former employers following the decision.
The Court of Final Appeal - comprising permanent judges Mr Justice Kemal Bokhary, Mr Justice Patrick Chan Siu-oi and Mr Justice Roberto Ribeiro - rejected the travel agency's argument that tips paid to tour guides did not fall within the statutory meaning of tips under the Employment Ordinance.
Acting for Wing On Travel, barrister Chan Chi-hung SC argued that the employer did not intend to recognise tips as part of the guides' wages, even though the travel agency provided customers with detailed recommendations on the tipping rate.
Mr Chan also said the tips were difficult to calculate because they were at customers' discretion.
Rejecting Wing On Travel's claims, the court upheld a lower court's judgment last May that the income of the tour guides comprised not only the basic salary but also the net tips earned.
Yesterday's ruling came after the Court of Appeal refused to grant leave to Wing On Travel in October to appeal against the May judgment, which ruled tour guide Lam Pik-shan was eligible to have the tips included in calculations for compensation for extra days she had worked.
Speaking outside court, Dicky Tong Kim-sang, chairman of the Hong Kong Travel Industry (Outbound) Tour Escort and Tour Guide Union, said about 300 tour guides had filed similar claims with the Labour Tribunal against their former employers, ranging from HK$10,000 to HK$100,000.
Mr Tong said the tips payment problem affected more than 2,000 tour guides. He expected about 1,000 more tour guides to launch similar claims after yesterday's ruling.
'When most of the tour guides are getting a basic salary of about HK$1,800, tips make up 90 per cent of their income,' he said.
Wing On Travel expressed disappointment with the ruling, saying: 'The tips payment system has been widely adopted by many travel agencies in Hong Kong. The ruling will have profound impacts on the travel industry as well as those sectors adopting similar tips systems.'
Travel Industry Council executive director Joseph Tung Yao-chung said: 'We are deeply disappointed. I hope we can work out something to balance the interests of the agencies, tour guides and customers.'