New law requires service charge distributed to all employees

FILE: President Rodrigo Roa Duterte in Cebu City on May 1, 2018. RICHARD MADELO/PRESIDENTIAL PHOTO

MANILA — President Rodrigo Duterte has signed a law that requires hotels, restaurants, and other establishments to allocate all service charges collected from customers to all covered employees.

Republic Act 11360, which the President signed on August 8, amends Article 96 of the Labor Code, where management takes 15 percent of the service charge and the rest for employees.

The amended Article 96 provides that “all service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.”

The new law said “in the event that the minimum wage is increased by the law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage.”

A grievance mechanism shall be established to facilitate resolution of any dispute between the management and the employees on the distribution of service charges, it added.

The law, however, explained that “nothing in this Act” shall be construed to diminish the existing benefits under present laws, company policies and collective bargaining agreements.
RA 11360 was based on Senate version (SB 1299), which the bicameral panel of Congress adopted in May this year.