Employees Entitled to 100% of Service Charge Paid by Customers – VILLANUEVA


Senator Joel Villanueva filed a measure that mandates establishments to give 100 percent of its collected service charge and tips to their employees.

Currently, Article 96 of the Labor Code provides that employees are entitled to only 85 percent of the service charge paid by customers in hotels, restaurants and similar establishments while 15 percent goes to the management.

Under Senate Bill No. 1299 or “An Act Providing That 100% of the Service Charge Collected in Hotels and Other Establishments Be Distributed to All Covered Employees,” employees are entitled to 100 percent of the service charge paid by customers.

The bill was already discussed in a September hearing of the Committee on Labor, Employment, and Human Resources Development chaired by Villanueva. A Technical Working Group was then formed to further consult the stakeholders that will lead to the drafting of the committee report.

Meanwhile, according to the legislator, service chargeor tip is just a small portion of the total income of an establishment and it deserves to be given to the employees who are the ones actually providing service to its customers.

“The tip actually reflects the quality of service of our workers. It serves as incentive to do their best,” the lawmaker said.

Based on the preliminary results of the 2015 Annual Survey of Philippine Business and Industry (ASPBI), a total of 5,492 establishments were engaged in Accommodation and Food Service Activities sector. These establishments are those with total employment of 20 and over in the formal sector of the economy.

Furthermore, restaurants and mobile food service activities employ the highest number of workers. Total employment generated by the sector reached 268,655 in 2015. About 267,381 workers (99.5%) of the total workers were paid employees and 1,274 workers (0.5%) were working owners or unpaid workers.

Among the industry groups, the leading industry as to employment generation was restaurants and mobile food service activities with 181,152 or 67.4 percent of the total. Short term accommodation activities establishment and beverage serving activities establishments employed 76,636 (28.5%) and 6,596 (2.5%) employees, respectively.

“Considering that most of these workers are minimum wage earners, we think it is only fair to give them 100 percent of their hard-earned tips,” the senator underscored.

Villanueva further shared that the bill echoes the call in other parts of the world. In the United Kingdom, a survey conducted by the labor organization Unite revealed that approximately 90% of those who participated in the survey supports a bill that gives staff 100% ownership rights over their tips.

“Giving 100 percent of service charge solely to employees is an additional contribution for the payment of their personal and family expenses including food, rent, electricity and water bills. We think this is just a rightful move on the part of the establishments that hire them for the quality service they give to their customers,” he said.


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