New Law Distributes 100% Service Charges to Hotel and Restaurant Employees
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New Law Distributes 100% Service Charge to Hotel and Restaurant Employees

President Rodrigo Duterte signed Republic Act (RA) No. 11360, which allows the full distribution of service charge collected from customers in hotels, restaurants, and similar establishments to its employees three months following the Congress’ approval of Senate Bill (SB) No. 1299, also known as the “Service Charges in Hotels and Establishments Distribution Act.”

RA 11360 amends Article 96 of the Labor Code of the Philippines, which initially gave 85% of the collected service charges to hotel and restaurant workers while management receives the remaining 15%. It is the standard service charge rate for 40 years until the Bicameral Committee ratified SB. No. 1299 on May 2019.

Employees classified as managers “who lay down and execute management poliies or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees or to effetively recommend such managerial actions” will no longer receive a portion of the service charges. 

The President signed RA 11360 last August 7 and will take effect 15 days after its publication in the Official Gazette or two other newspapers. 

Labor Groups Welcomes Signing of Service Charge Law

The General Alliance of Workers Associations (GAWA) and the Trade Union Congress of the Philippines (TUCP) both lauded the President’s signing of RA 11360. GAWA Secretary-General Wennie Sancho said the incentive should increase not just the employee’s income but also their productivity.

“We hope this positive development will give more reasons to the workers to strive to increase their productivity and provide better and quality service to the customers,” Sancho said.

TUCP President Raymond Mendoza also said RA 11360 would improve the take-home pay of restaurant and hotel employees, especially when they require money to cover the everyday cost of living in the Philippines.

“This measure will also boost employees’ morale to be loyal and improve productivity to the company. This will also improve the quality service employees render to customers,” Mendoza said.

“We earnestly hope that all business owners and employers will fully comply for the benefit of their employees and for improving the reputation of their business,” he added.

The National Union of Workers in Hotel Restaurant and Allied Industries (NUWHRAIN) also welcomed RA 11360 as another milestone in their campaign to push forward the equal distribution of service charges to rank and file and managerial employees of hotels and restaurants.

“This new law will raise the take-home pay of workers of HRSEs that collect service charge, but unfortunately will not benefit those employed in establishments that do not collect service charge,” said Daniel Edralin, the Secretary General of the NUWHRAIN.

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