Villanueva: Gov't puts end to 40-year struggle of hospitality workers as Service Charge bill enacted into law

Senator Joel Villanueva has called the signing of the Service Charge law the fulfillment of the four-decade struggle to distribute the fee collected from consumers in the hospitality industry.

In a statement, Villanueva expressed gratitude to the government for putting an end into the struggle of workers in the services industry, who have been pushing for the full distribution of service charge collected at restaurants, hotels, and other similar establishments for over 40 years with the enactment of Republic Act No. 11360, or the Service Charge law.

"Sa wakas, natapos na rin po natin ang laban ng ating mga manggagawa sa services sector na matagal nang hinihiling ang buong pagbabahagi ng service charge sa mga nagbibigay ng serbisyo sa mga restaurant, hotel, at mga katulad na establisyimento," Villanueva stated. "The law allows our frontline service workers to enjoy the fruits of their labor, the reward for providing good, quality service."

The law amends Article 96 of the Labor Code of the Philippines which provides that covered employees are entitled to only 85 percent of the service charge paid by customers in hotels, restaurants and similar establishments. The remaining 15 percent is withheld by management to answer for losses and breakages and distribution to managerial employees at the discretion of the management in the latter case.

The new law, which President Duterte signed on August 7, 2019, mandates that all rank-and-file and supervisory employees should receive 100 percent of the service charge collected.

Employees who are classified as managers--described as those "who lay down and execute management policies or to effectively recommend such managerial actions"--are excluded from getting a share in the service charge, according to the law.

"Concerns on the possible effect of the measure on the benefits that managerial employees may receive are understandable. But we reiterate that the law also clarifies that nothing in it shall result in the diminution of existing benefits under present laws, company policies and bargaining agreements," Villanueva said.

As of Jan. 10, 2019, inspection data from the Department of Labor and Employment (DOLE) showed that 157 companies are in violation of the regulations on service charge, recording a 99.65-percent compliance rate of companies. Despite the high compliance rate, DOLE admitted that they do not actually examine whether 85 percent of the total service charge collected is actually and accurately distributed to the covered employees.

The government institutionalized the 85-15 percent split on the collected service charge through Presidential Decree No. 850 which was promulgated in December 1975.