Duterte signs law requiring full distribution of service charge to hotel, restaurant workers

MANILA, Philippines — President Rodrigo Duterte signed into law a measure requiring establishments to distribute in full the service charges they collected to their employees.

Republic Act 11360 signed by the president last August 7 amended Article 96 of the Labor Code, which stated that all service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of 85% for all covered employees and 15% for management. 

The amended article states that all service charges collected by hotels, restaurants, and similar establishments shall be distributed completely and equally among the covered workers except managerial employees. 

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In the event that the minimum wage is increased by 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. 

The amended provision also establishes a grievance mechanism to facilitate the resolution of any dispute between management and employees on the distribution of service charges. 

If no grievance mechanism is established or if such a mechanism is found inadequate, the issue shall be referred to the Labor department's regional office.

The law defined managerial employees as any person with powers or prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions. 

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The amended provision should not diminish existing benefits under present laws, company policies and collective bargaining agreements.