Labor Secretary Bienvenido Laguesma —DOLE FB PHOTO
Contractual rank-and-file workers in the service industry are now entitled to receive an equal share of the service charges collected by the establishments that hire them, according to the Department of Labor and Employment (Dole).
Department Order No. 242, series of 2024, signed by Labor Secretary Bienvenido Laguesma and released on Friday, expanded the coverage of workers that would benefit from the service charge by removing the direct employment clause from the previous order.
“Covered employees refer to all employees, except managerial employees as defined herein, regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid,” it said.
“Regular or nonregular employees are entitled to collected service charges,” Dole’s Bureau of Working Conditions said on its Facebook page on Friday.
It said the order was a Valentine’s Day “gift” to workers in the service industry.
10 percent of bill
Service charges refer to the amount added to the bill for work or service rendered by establishments. No law specifies the maximum or minimum amount of the service charge, but most establishments put it at 10 percent of the bill.
The new order supersedes 2019 Department Order No. 206, which served as the original implementing rules and regulations (IRR) of Republic Act No. 11360, or the service charge law signed in August that year.
The order will take effect 15 days after its publication in at least two newspapers of general circulation.
According to Dole, the revised IRR is “coherent with the legislative intent of full and equal payment of service charges to all covered employees of service charge-collecting establishments.”
Under the previous IRR, employees who get a share of the collected service charge are only those “under the direct employ” of the concerned establishments.
These establishments include hotels, restaurants, lodging houses, nightclubs, cocktail lounges, massage clinics, bars, casinos and gambling joints, golf and sports clubs, and other similar businesses.
The new Dole order also specifies the nondiminution of benefits, which means the new rules on service charge distribution should not reduce the existing benefits of the covered employees.
A provision on resolving disputes over the distribution of the service charge was also updated by expanding the dispute referral system to the Dole regional, provincial, field, or satellite office having jurisdiction over the workplace.
Under the old IRR, grievances are to be settled only in the regional Dole office concerned.
Compliance monitored
Conciliation should also adhere to the single-entry approach of Dole, under which labor and employment issues are to be settled through a 30-day mandatory conciliation-mediation.
Dole directed its regional, provincial, field and satellite offices to monitor the compliance of establishments that collect service charges.
The new IRR retained the provision on when service charge payouts were to be made, which is twice a month, with no less than 16 days of interval frequency.
The service charge payouts cannot be considered part of an establishment’s wage payments to its workers.
For instance, the tripartite wage board has approved a P50 hike in the minimum daily wage of workers in the National Capital Region, which is equivalent to P1,000 per month. A restaurant owner in Metro Manila cannot refuse to give the mandated pay raise by citing the P1,000 share of the collected service charge that his worker may have received.
The collected service charges would be distributed “completely and equally, based on actual number of hours or days of work or service rendered, among the covered employees,” according to the order.
Previous arrangement
Prior to the signing of RA 11360, Article 96 of the Labor Code provided for an 85 percent to 15 percent distribution of the service charges collected, with the management staff getting the smaller portion.
The sharing mechanism was originally intended to help management get compensation for any breakage or wastage by their employees.
The changes in the service charge rules in the new Dole order was prompted by a resolution from the National Anti-Poverty Commission-Formal Labor and Migrant Workers Sectoral Council (NAPC-FLMWSC), which the National Tripartite Industrial Peace Council recommended for approval by Laguesma last week.
“The intention of the new DO is to cover nonregulars and agency workers,” said Danilo Laserna, vice president of the Federation of Free Workers (FFW) and a worker’s representative to the NAPC.
The Aug. 1, 2023, resolution passed by the NAPC-FLMWSC called for the review of the IRR and recommended amendments, saying that “several provisions of the issuance are not in accordance with the law.”
READ: Senate ratifies service charge bill
The FFW said the deletion of the phrase “under the direct employ of covered establishments” in the old rules was “a critical step in recognizing and rewarding the efforts of workers who, though not directly hired by the principal employers, contribute to the service experience of clients or customers.”
“The FFW urges employers to work collaboratively with the unions and their employees to ensure a smooth transition to this more equitable system,” it added. —WITH A REPORT FROM INQUIRER RESEARCH