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No more manager’s cut: All tips will go to service crew under new law

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President Rodrigo Duterte has signed the Service Charge law giving 100 percent of service charge paid in restaurants, hotels to service staff.

The Service Charge law or Republic Act No. 11360 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.

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.

In a statement, Senator Joel Villanueva would put an end to 40 years of unfair distribution of service workers’ tips and charges to managers.

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

“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 said.

“The law allows our frontline service workers to enjoy the fruits of their labor, the reward for providing good, quality service,” he added.

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