Service Charges
Art. 96. Service Charges.—All service charges collected by hotels, restaurants and similar establishments shall be distributed at the rate of eighty five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wage. (Labor Code)
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Who shares in the services charges collected by hotels, restaurants and similar establishments be distributed?
How shall the services charges be distributed?
The service charges collected shall be divided between the employees and the management. 85% of it goes to the employees while 15% goes to the management. (Art. 96, Labor Code)
Who are the employees entitled to the distribution of the service charges?
All employees of covered employers, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid, except managerial employees, are entitled to the distribution of the service charges. (Book III, Rule 4, Section 2, Implementing Rules of the Labor Code of the Philippines)
If the employee is under an agency, is he entitled to receive such service charges?
No. To be considered as covered employees, one must be directly employed by the establishment and/or undertaking, whether for profit or not, but not including government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Article 82, Ibid.) In addition, there must be a concrete showing of employer-employee relationship between the claimant-employee and the employer he/she is claiming from. In a long line of cases, our Supreme Court has pronounced the so-called “four-fold test” to determine the existence of an employer-employee relationship, to wit: (1) the selection and engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct (Escario, et al. vs. NLRC, 333 SCRA 257, G. R. No. 124055, June 8, 2000). No benefits under the Labor Code may be claimed if any of the said elements is absent.
If the hotel has no control over any of the said elements, such that when the said control belongs to the agency which hired the employee, then said employee may not demand for the said benefit from the hotel. (Dear Pao, Manila Times, Nov. 12, 2015)
How are the services charges be distributed among the employees?
● The share of the employees shall be equally distributed among them. (Art. 96, Labor Code)
● If a restaurant or similar establishment does not collect service charges but instead has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips are to be monitored, accounted, and distributed in the same manner as service charges.
How often should the services charges be distributed?
The service charges collected shall be distributed and paid to the employees at least once every two weeks or twice a month of intervals not exceeding sixteen days (Book III, Rule VI, Sec 4, of the Implementing Rules of the Labor Code of the Philippines).
May the employer and employees agree to a more favorable arrangement for the employees?
These provisions of the law shall not prevent the employer and employees from entering into agreements that are more favorable to the employees, nor should they be used to diminish any benefits already existing if such is more favorable than those provided by law (Book III, Rule VI, Sec 6, of the Implementing Rules of the Labor Code of the Philippines).
- Employees
- Management
How shall the services charges be distributed?
The service charges collected shall be divided between the employees and the management. 85% of it goes to the employees while 15% goes to the management. (Art. 96, Labor Code)
Who are the employees entitled to the distribution of the service charges?
All employees of covered employers, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid, except managerial employees, are entitled to the distribution of the service charges. (Book III, Rule 4, Section 2, Implementing Rules of the Labor Code of the Philippines)
If the employee is under an agency, is he entitled to receive such service charges?
No. To be considered as covered employees, one must be directly employed by the establishment and/or undertaking, whether for profit or not, but not including government employees, managerial employees, field personnel, members of the family of the employer who are dependent on him for support, domestic helpers, persons in the personal service of another, and workers who are paid by results as determined by the Secretary of Labor in appropriate regulations. (Article 82, Ibid.) In addition, there must be a concrete showing of employer-employee relationship between the claimant-employee and the employer he/she is claiming from. In a long line of cases, our Supreme Court has pronounced the so-called “four-fold test” to determine the existence of an employer-employee relationship, to wit: (1) the selection and engagement of employee; (2) the payment of wages; (3) the power of dismissal; and (4) the power to control the employee’s conduct (Escario, et al. vs. NLRC, 333 SCRA 257, G. R. No. 124055, June 8, 2000). No benefits under the Labor Code may be claimed if any of the said elements is absent.
If the hotel has no control over any of the said elements, such that when the said control belongs to the agency which hired the employee, then said employee may not demand for the said benefit from the hotel. (Dear Pao, Manila Times, Nov. 12, 2015)
How are the services charges be distributed among the employees?
● The share of the employees shall be equally distributed among them. (Art. 96, Labor Code)
● If a restaurant or similar establishment does not collect service charges but instead has a practice or policy of monitoring and pooling tips given voluntarily by its customers to its employees, the pooled tips are to be monitored, accounted, and distributed in the same manner as service charges.
How often should the services charges be distributed?
The service charges collected shall be distributed and paid to the employees at least once every two weeks or twice a month of intervals not exceeding sixteen days (Book III, Rule VI, Sec 4, of the Implementing Rules of the Labor Code of the Philippines).
May the employer and employees agree to a more favorable arrangement for the employees?
These provisions of the law shall not prevent the employer and employees from entering into agreements that are more favorable to the employees, nor should they be used to diminish any benefits already existing if such is more favorable than those provided by law (Book III, Rule VI, Sec 6, of the Implementing Rules of the Labor Code of the Philippines).
What is the rule if the service charge is abolished?
How shall the management apply the service charges?
The management shall apply it to losses and breakages, and, if so decided, for distribution to employees receiving more than Php2,000.00/month. (Book III, Rule VI, Par. 2, Section 2, of the Implementing Rules of the Labor Code of the Philippines).
The management shall apply it to losses and breakages, and, if so decided, for distribution to employees receiving more than Php2,000.00/month. (Book III, Rule VI, Par. 2, Section 2, of the Implementing Rules of the Labor Code of the Philippines).
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