Dear PAO,

I am working as a waiter in a restaurant. The restaurant imposes a 6 percent service charge based on the total bill of the customers. However, we observed that after the service charges were totaled, the employer divided it among the employees, including the managers. Is the employer right in giving the managers part of the collected service charges?

Johlo

Dear Johlo,

First, we should discuss the concept of service charge. Contrary to a tip, which is voluntarily given by the customers, a service charge pertains to the additional payment collected by hotels, restaurants, and similar establishments.

According to Article 96 of the Labor Code of the Philippines, as amended by Republic Act 11360 (RA11360), these service charges collected by the aforementioned establishments should be distributed completely and equally among the covered workers, to wit:

“Art. 96. Service Charges. – All service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.”

It is clear from the above-mentioned law that service charges should be given to the covered employees, except managerial employees. Covered employees refer to those under the direct employ of the establishment, regardless of their positions, designations, or employment status, and irrespective of the method by which their wages are paid. (Section 2 (a) Implementing Rules of RA 11360)

Therefore, the employer does not have the right to include managerial employees in the distribution of service charges. It is clear that managerial employees are not entitled to have a part of the collected service charges.

The question now is: what is the definition of managerial employees? The same article provides that:

“For purposes of this Article, managerial employees refer to any person vested with powers or prerogatives to lay down and execute management policies or hire, transfer, suspend, pay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.”

In your case, the service charges collected by the restaurant should be completely given and distributed to all employees, except managerial employees. Therefore, your employer violated the Labor Code of the Philippines by giving a portion of the service charges to managers, instead of excluding them.

We hope that we were able to answer your queries. This advice was based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.

Thank you for your continued trust and support.

Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]