New rules on Service Charge Law out

(UPDATE) THE Department of Labor and Employment (DoLE) has issued the implementing rules and regulations (IRR) of Republic Act (RA) 11360, or the «Service Charge Law,» that provides for the full and equal distribution of service charges among workers of hotels, restaurants and other establishments.

RA 11360's revised IRR was contained in Department Order (DO) 242, series of 2024, issued on Feb. 1, 2024.

The DoLE said the new IRR, which supersedes DO 206, series of 2019, was coherent with the legislative intent of full and equal payment of service charges to all covered employees of service charge-collecting establishments.

The new guidelines deleted the phrase «under the direct employ of covered establishments» in Section 2 (a) of the old rules.

The amendment aims to improve the distribution of service charges to cover all employees, including those not directly hired by the principal employers, such as «contractual, non-regular or agency workers» serving the covered establishments.

«Covered employees refer to all employees, except managerial employees as defined herein, regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid,» read the new IRR.

Under the Service Charge Distribution rules, managerial employees are not covered to partake in the distribution of service charges, directing more financial benefits to rank-and-file and supervisory level employees, or those «regardless of their position, designations, or employment status, and irrespective of the method by which their wages are paid.»

All collected service charges will be evenly distributed among employees on a bimonthly basis. The distribution will be proportional to the hours or days of work or service rendered, ensuring fairness and transparency in the allocation of these funds.

Employees or their unions also have the right to file grievances. Workers without a union may seek assistance from the DoLE should there be concerns or disputes regarding the distribution of service charges.

The new rules also specify the non-diminution of benefits, which means the new rules on service charge distribution shall not diminish the existing benefits