Service Charges Collected by Hotels, Restaurants, and Other Similar Establishments Now to be Fully Distributed to All Covered Employees

New Legislation Enacted

Author: Emerico O. De Guzman, Managing Partner - Angara Abello Concepcion Regala & Cruz Law Office (ACCRALAW)

Beginning September 3, 2019, 100% of the service charges collected by hotels, restaurants and similar establishments shall now be distributed equally among all covered workers, excluding managerial employees, pursuant to Republic Act No. 11360. Previously, the distribution of service charges was at 85% for covered employees, and 15% for management as a reserve for losses and breakages, and at its discretion, for distribution to managerial employees. In case of an increase in the minimum wage by law or wage order, the new law also explicitly excludes service charges paid by the employer in determining compliance with said increase in minimum wage.