New law on service charge seen to boost productivity

THE just-signed law mandating that 100 percent of the service charge collected in restaurants and hotels be distributed among their employees is seen to boost the workers’ productivity.

President Rodrigo Duterte signed Republic Act 11360 on August 7.

It amended Article 96 of the Labor Code of the Philippines giving restaurant and hotel workers only 85 percent of the service charge collected from customers while the remaining 15 percent was retained by the management.

Wennie Sancho, secretary general of General Alliance of Workers Associations (Gawa), said the signing is a welcome development that would increase the income of the hotel and restaurant employees.

Sancho said this incentive should motivate the workers to increase their productivity, because productivity goes with the pay.

“We hope that this positive development -- the 100 percent service charge for the employees -- will give more reasons for the workers to strive to increase their productivity and provide better and quality services to the customers,” he added.

It can be recalled that on May 28, the Senate ratified the bill granting 100 percent of the service charge to restaurant and hotel employees as well as to those of similar establishments in the service industry.

The Congress Bicameral Conference Committee, earlier that day, adopted the reconciled version of the Senate Bill No. 1299 and House Bill No. 8784.

The bill covers rank-and-file service industry workers as well as supervisors.

Under which, all service charges shall be equally distributed among these workers from the previous 85 - 15 percent sharing.

The new law, however, excludes employees who are classified as managers from getting a share in the service charge.

The law describes managers as those “who lay down and execute management policies or hire, transfer, suspend, lay off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.”

Sancho, also the labor representative to the Regional Tripartite Wages and Productivity Board (RTWPB) in Western Visayas, said they hope that there would be a faithful implementation of the law.

Sancho said sometimes the law exists but the problem is on the implementation.

The implementing rules and regulation (IRR), he said, should also be strengthened to implement the spirit of the law for the good of the workers.

“In spite of the veto of security of tenure, I think this is one development that could apiece the sentiments of the workers,” the labor leader said, adding that service charge in the hotel and restaurant industry is huge.

Senate committee on labor chairman Senator Joel Villanueva, in a report, said based on the inspection data from the Department of Labor and Employment, there are 157 companies violating the regulations on service charge as of January 10 this year.

Villanueva said the agency 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 law allows frontline service workers to enjoy the fruits of their labor, the reward for providing good and quality service,” the senator added.


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