Breakdown of service charges | The Manila Times


Dear PAO,

I work in a restaurant and there is always a dispute about the distribution of service charges between us, the employees. Can you enlighten me on the proper distribution of service charges collected in our restaurant? Should we also share the amount collected with management?


Dear Rys,

The Labor Code of the Philippines, as amended by Republic Act 11360, contains a specific provision relating to the allocation of service charges, namely:

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“Art. 96. Service charges. – All service charges received by hotels, restaurants and similar establishments are distributed in full and equally between the workers covered, with the exception of executives.

“In the event of a minimum wage increase pursuant to a wages ordinance, service charges paid to covered employees will not be considered in determining employer compliance with the minimum age increase .

“To facilitate the resolution of any dispute between management and employees over the allocation of service charges, a grievance mechanism should be established. If no grievance mechanism is established or is inadequate, the grievance should be referred to the regional office of the Department of Labor and Employment that has jurisdiction over the workplace for conciliation.

“For the purposes of this article, management employees means any person vested with power or prerogative to establish and carry out management policies or to hire, transfer, suspend, pay, recall, discharge, assign or discipline employees or to effectively recommend these management employees. Actions.”

The cited law clearly states that all service charges collected must go to the covered employees, with no cent going to management. This is a departure from the original wording of the law, which splits service fees between covered employees and management at 85% and 15%, respectively.

As for the mode of distribution of service charges received between employees, this provision expressly provides that they must be distributed equally among all covered rank or salary employees, with the exception of managerial employees. This is in accordance with the rules and regulations of Republic Act 11360, which states that:

“SEC.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, except exception of management employees.”

Therefore, the equal distribution among employees of the service fees collected should be implemented regardless of their position, designation or employment status, and regardless of the method of payment.

Please also note that the law provides for the distribution schedule of service charges 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 Republic Act 11360).

Finally, any disputes arising from the allocation of service fees shall be resolved through the grievance mechanism provided for in the collective agreement, if applicable, or shall be referred to the regional DoLE office having jurisdiction over the place of service. work. (Idem, article 6)

We hope we were able to answer your questions. Remember that this advice is based solely on the facts you have reported 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]


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