Congress approves “Service Charge” Bill
Service Charge Bill-min

Congress approves “Service Charge” Bill

The Senate of the Philippines recently passed the bill which grants rank-and-file workers from the hotel and restaurant industry with full-service charges collected from customer payments on May 28. As of this writing, the House of Representatives ratified this Senate bill together with another bill seeking to lower electricity rates for consumers last week.

According to Article 96 of the Labor Code, the current distribution of the service charge collected by hotels and restaurants is at 85% for all employees and 15% for management.

Senate Bill (SB) No. 1299, also known as the “Service Charges in Hotels and Establishments Distribution Act”, aims to amend the old provision and redistribute 100% of the service charges to employees. Senator Joel Villanueva, the Principal Author of the bill, filed it together with Senators Cynthia Villar and Juan Miguel Zubiri.

Service Charge rate to change after 40 years

Villanueva expressed his relief after the Senate finally passed SB No. 1299. He mentioned that the sharing distribution did not change since the Philippine Government implemented provisions in Book III of the Labor Code under Presidential Decree No. 850.

“After more than 40 years, ngayon ‘yung service charge ay 100% na mapupunta sa ating workers (after more than 40 years, the service charge would 100% finally be given to our workers). We were able to thresh out the difference between the version[s] of the House and the Senate,” Villanueva said in an interview last week.

Villanueva explained that the management of hotel and restaurants in the Philippines currently receive 15% of the service charge as payment for incurred losses. However, employees of said establishments are only able to receive the 15% service charges if the business did not incur any loss or breakage.

Villanueva cited complaints from employees on how these establishments currently split the service charge between their management and workers. Some companies distribute the accumulated fees in reverse, giving laborers the mandated 15% service charge for management instead of 85%.

“Maraming mga datos tayo, maraming mga survey, maraming mga complaints (we acquired data, conducted surveys, and received a lot of complaints), even establishments in Quezon City na baliktad pa nangyayari, 15% nakukuha ng waiters, tapos 85% nakukuha ng management (some complainants from Quezon City said they receive the charges in reverse. Waiters get 15% while the management receives 85%),” Villanueva added.

If President Rodrigo Duterte signs SB No. 1299, the 100% service charge will go to the employees of hotels, restaurants, and other similar establishments instead of their management. As of today, SB No. 1299 is waiting for the President’s approval, along with the “Murang Kuryente” bill.

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