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Labor Code amended to allow 100 percent of service charges to go to employees

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By Genalyn Kabiling

A law providing the 100 percent distribution of the service charges collected by hotels, restaurants, and other establishments to covered employees has been signed by President Duterte.

President Rodrigo Roa Duterte signs the Republic Act 11033 'Converting the Davao Oriental State College of Science and Technology into a State University' and Republic Act 11032 or 'Ease of Doing Business Act' during the ceremonial enactment at Malacañan Palace on May 28, 2018. Joining the President are Senate President Vicente Sotto III and House Speaker Pantaleon Alvarez. ROBINSON NIÑAL JR./PRESIDENTIAL PHOTO

President Rodrigo Roa (ROBINSON NIÑAL JR./PRESIDENTIAL PHOTO / MANILA BULLETIN)

Republic Act No. 11360 amended the Labor Code to allow the full distribution of the service charge to employees in the hospitality industry.

The Labor Code previously stated that service charges collected by hotels, restaurants and other establishments must be distributed at 85 percent to employees and 15 percent to the management.

“All service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees,” the new law read.

“In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage,” it added.

The new law also allowed the creation of a grievance mechanism to resolve any dispute between the management and employees on the distribution of service charges.

“If no grievance mechanism is established or if inadequate, the grievance shall be referred to the regional office of the Department of Labor and Employment which has jurisdiction over the workplace for conciliation,” it said.

The law, signed last August 7, takes effect 15 days after publication in the Official Gazette or in two newspapers.

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