I am one of the owners of a restaurant where there has been a dispute in the distribution of service charges among our employees particularly among the waiters and the cooks as to how much share of service charge each will get. Is there any law on the manner and proper distribution of the collected service charges in our establishment? Also, can the management have a share in the service charges collected? I hope you can clarify this matter.
The Labor Code of the Philip–pines has a specific provision pertaining to the distribution of the service charges, to wit:
“Art. 96. Service Charges.—All service charges collected by hotels, restaurants and similar establish–ments shall be distributed at the rate of eighty five percent (85%) for all covered employees and fifteen percent (15%) for management. The share of the employees shall be equally distributed among them. In case the service charge is abolished, the share of the covered employees shall be considered integrated in their wage.”
The cited law is clear on how the service charges collected are divided between the employees and the management. 85% of it goes to the employees while 15% goes to the management. Thus, while the employees get the bulk of the collected service charges, the management still takes a share in the service charges.
As to the manner of distribution of the collected service charges among employees, the above cited law specifically provides that it should be distributed equally among employees. In connection with this, the Implementing Rules of the Labor Code provides that:
“SEC.2. Employees covered—This rule shall apply to all employees of covered employers, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid, except to managerial employees.
xxx.” (Book 2, Rule 4, Section 2, Implementing Rules of the Labor Code of the Philippines)
Therefore, the equal distri–bution among employees of the collected service charges should be implemented regardless of their positions or designations. Con–sidering this, the share that will be received by your waiters should be the same with those received by your cooks and other employees. However, managerial employees, as specifically mentioned in the abovecited law, are not included in the distribution of the ser- vice charge for employees as they partake on the share of the management.
Also note that the laws provides for the schedule of distribution of the service charges which shall be distributed and paid to the employees not less than once every two weeks or twice a month of intervals not exceeding sixteen days (Sec 4, Book III, Rule VI of the Implementing Rules of the Labor Code of the Philippines).
Lastly, it is important to remember that these provisions of the law shall not prevent the employer and employees from entering into agreements that are more favorable to the employees, nor should they be used to diminish any benefits already existing if such is more favorable than those provided by law (Sec. 6, Book III, Rule VI of the Implementing Rules of the Labor Code of the Philippines).
Again, we find it necessary to mention that this opinion is solely based on the facts you have narrated and our appreciation of the same. The opinion may vary when the facts are changed or elaborated.
We hope that we were able to enlighten you on the matter.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to email@example.com