Service charge

Service charge | The Manila Times

Dear PAO,

We have an ongoing dispute at the restaurant where I work regarding the distribution of service charges among its employees. Is there a law on the proper distribution of charges collected in an establishment? Can the management legally request a contribution to the charges collected?


Dear Noi,

The Labor Code of the Philippines contains a specific provision relating to the distribution of service charges, namely:

“Article 96. Service charges. — All service charges collected by hotels, restaurants and similar establishments are allocated at the rate of eighty-five (85) percent for all employees covered and fifteen (15) percent for managers. The share of employees is divided equally between them. In the event of the abolition of the fee, the share of covered employees is considered to be included in their salary. » |

The cited law is clear on the distribution of the charges collected between the employees and the management; Of which 85% goes to employees while 15% goes to management. So, while employees receive a large percentage of the service fee collected, management is still entitled to a portion of it.

As for the mode of distribution of the charges collected between the employees, the aforementioned law expressly provides that they must be distributed equally among all the employees covered with the exception of the executives. This is in accordance with the Rules and Regulations of Republic Act (RA) 11360, which states that:

“SECTION 2. Covered Employees — This Rule applies to all employees of Covered Employers, regardless of their position, designation or employment status, and regardless of the method of payment of their wages, exception of management employees. »

Therefore, the equal distribution among employees of the service fees collected should be implemented regardless of their positions, designations or employment status and regardless of the mode of payment.

The law provides for the distribution schedule of service fees, which must be distributed and paid to employees at least once every two weeks or twice a month at intervals not exceeding sixteen days (Article 4 of the Rules and Regulations of application of RA 11360 and Department Order 206 of the Department of Labor and Employment or DoLE).

Any dispute arising out of the allocation of service fees shall be resolved through the grievance mechanism provided in the collective agreement, if any, or shall be referred to the regional DoLE office having jurisdiction over the workplace. (Idem, article 6)

We hope we were able to answer your questions. This advice is based solely on the facts you have related and our assessment of them. Our opinion may change when other facts are changed or elaborated.

Editor’s note: Dear PAO is a daily chronicle of the public ministry. Questions for Chef Acosta can be sent to [email protected]