Press Release
December 11, 2017

Senate approves Villanueva's service charge bill on final reading

The Senate approved today on third and final reading a bill which would allow restaurant and hotel employees 100 percent access to service charges collected from customers.

Senator Joel Villanueva, principal author and sponsor of Senate Bill No. 1299, said restaurant and hotel workers were given only 85 percent of the total tips collected from customers while management retained the remaining 15 percent.

He said the sharing distribution had not changed since it became law in 1975.

"On December 1975, then President (Ferdinand) Marcos institutionalized service charge into law under Section 14 or Presidential Degree 850. The collection of service charge was optional but any amount collected shall be distributed 85 percent and 15 percent in favor of employees," Villanueva, chairman of the Senate Committee on Labor, Employment and Human Resources Development, said.

Once the proposed measure was enacted into law, Villanueva said, restaurant and hotel workers, whether regular, contractual, or agency-hired, would be entitled to a 100 percent service charge as long as they would directly deliver the service to their customers.

"The bill does not make the collection of service charge mandatory to avoid interference with the right to management to exercise discretion in the operation of their business. The proposed 100 percent service charge for our workers would benefit both the workers and the employers," Villanueva said in his sponsorship speech.

At present, he explained, management gets 15 percent of the service charge proceeds to answer for losses or breakages. However, he said, if there were no losses or breakages, the 15 percent was the management's prerogative for disposition or distribution among managerial employees.

In most cases, he said establishment owners thought the distribution of the service charge proceeds was a management prerogative. He cited a SparkUp survey, a multimedia platform of Business World, which showed that most of the staff did not received their 85 percent tip.

A data from the Department of Labor and Employment (DOLE) showed that from ??2014-2017, around 621 establishments out of 212,641 inspected nationwide violated labor provisions on service charge, according to Villanueva.

He said the proposed measure seeks to "address the injustice brought upon our hardworking workers in the service industry who provide the actual service, but rarely get their proper share in collection." (PM)

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