DOLE Mandates Equal Sharing of Service Charges for All Employees

Photo courtesy of: politiko.com.ph

Manila—The Department of Labor and Employment (DOLE) has rolled out a significant policy update, mandating that all employees of establishments collecting service charges must now equally share in the proceeds, regardless of their employment status. This crucial directive, formalized under DOLE Department Order No. 242, Series of 2024, became fully effective nationwide on February 1, 2024, marking a pivotal step towards enhancing worker welfare in the service industry. 

This latest Department Order serves as the Implementing Rules and Regulations (IRR) for Republic Act No. 11360, which amended Article 96 of the Labor Code. Before this amendment and the subsequent DOLE Order, the distribution of service charges often led to disparities, with some establishments limiting the benefits exclusively to regular employees. 

The new issuance unequivocally closes this gap, ensuring that even probationary, contractual, and other directly-hired employees who contribute to the service are included in the distribution. 

The core intent of DOLE Department Order No. 242 is to promote equitable labor practices and recognize the collective effort behind service delivery. It mandates that 100 percent of the service charges collected by hotels, restaurants, and similar establishments from their customers must be distributed entirely and equally among all covered employees. This includes personnel directly involved in providing service to customers, regardless of their position or how long they have been employed. 

"Dapat maisama pati mga manggagawa ng service providers for as long as bahagi sila ng pagbibigay ng serbisyo... Lalawak ang bilang ng mga manggagawa na dapat pag-ukulan ng nasabing service charges," Labor Secretary Bienvenido Laguesma stated in an interview on Super Radyo dzBB on February 3, 2024. (Even workers of service providers must be included for as long as they are part of the service... There will be a wider range of workers who will benefit from the said service charges.) 

This expansion of coverage is anticipated to provide a substantial boost to the take-home pay of thousands of workers across the hospitality and service sectors, particularly benefiting those in entry-level or non-regular capacities who were previously excluded. For businesses, compliance entails reviewing and adjusting their internal service charge distribution policies to align with the new mandate. DOLE's regional offices are tasked with monitoring adherence to the order and ensuring its proper implementation across all covered establishments. This regulation underscores the government's commitment to ensuring fair compensation and inclusive growth within the Philippine labor force.