The Malaysian government implemented a minimum wage policy throughout all businesses in 2013, with aimed to improve the living standards of Malaysian and non-Malaysian employees. Initially, the monthly minimum wage was set at RM900 (USD215 - dependent on exchange rate) for Peninsular Malaysia and RM800 (USD191) for other parts of Malaysia. In July 2016, the monthly minimum wage increased to RM1,000 (USD236) for Peninsular Malaysia and RM920 (USD217) for other parts of Malaysia. The minimum wage policy implementation impacted hotel businesses and employees. As a labor-intensive industry, hotel businesses reported increases in operational and labor costs. This study investigated the impact that the minimum wage policy has had on hotel employees’ perceived satisfaction with compensation, work motivation, work engagement, job satisfaction, turnover intention, and quality of life.

An electronic questionnaire was developed and distributed to current and former employees from three-, four-, and five-star hotels in Malaysia. Based on the correlational analysis (n = 239), this study found that perception of the minimum wage policy was moderately correlated with satisfaction toward compensation (r = 0.301, p < 0.01). Satisfaction toward compensation was found to be moderately correlated with work motivation (r = 0.423, p < 0.01) and work engagement (r = 0.316, p < 0.01). Additionally, satisfaction toward compensation was found to be largely correlated with job satisfaction (r = 0.604, p < 0.01) and moderately correlated with turnover intention (r = -0.315, p < 0.01). Using Mplus, confirmatory factor analysis and structural equation modeling were performed, and results of the fit indices showed that the hypothesized models were adequately fit to the data. Findings gathered extend findings by previous researchers concerning the impact of the minimum wage policy implementation on hotel employees’ work behaviors and perceived quality of life. Results of the bias-corrected bootstrap sampling procedures on the total indirect effects offered additional evidences regarding the significant mediating roles of work motivation, work engagement, and job satisfaction in influencing the overall results of the study, while considering changes in compensation systems. Future research could utilize the study framework to examine the impact of minimum wage policy implementation on hotel employees in other developing countries.