New Rules on Service Charge Law Enhance Fair Distribution of Benefits

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The Department of Labor and Employment (DoLE) has recently released the implementing rules and regulations (IRR) for Republic Act (RA) 11360, also known as the “Service Charge Law.” This law aims to guarantee the full and equal distribution of service charges among employees of hotels, restaurants, and other establishments.

The revised IRR, contained in Department Order (DO) 242, series of 2024, was issued on February 1, 2024. The new guidelines align with the legislative intent of providing fair compensation to all covered employees of service charge-collecting establishments. Notably, the phrase “under the direct employ of covered establishments” has been removed from Section 2(a) of the previous rules.

The amendment seeks to improve the distribution of service charges by including all employees, even those not directly hired by the principal employers. This includes contractual, non-regular, or agency workers who serve the covered establishments. The new IRR clarifies that “covered employees” refer to all employees, except managerial employees, regardless of their position, designation, or employment status, and irrespective of how their wages are paid.

Under the Service Charge Distribution rules, managerial employees are excluded from partaking in the distribution of service charges. This ensures that more financial benefits are directed towards rank-and-file and supervisory level employees, regardless of their position, designation, or employment status.

To ensure fairness and transparency, all collected service charges will be distributed evenly among employees on a bimonthly basis. The distribution will be proportional to the hours or days of work or service rendered. This allocation method guarantees that each employee receives their fair share.

Furthermore, the new rules grant employees or their unions the right to file grievances if there are concerns or disputes regarding the distribution of service charges. Workers without a union can seek assistance from the DoLE. This provision ensures that employees have a platform to address any issues that may arise.

The IRR also emphasizes the non-diminution of benefits, meaning that the new rules on service charge distribution cannot reduce the existing benefits of covered employees. This provision safeguards the rights and entitlements of workers.

In terms of dispute resolution, the updated rules expand the dispute referral system to the regional, provincial, field, or satellite office level. This allows for a more accessible and efficient resolution process, ensuring that disputes are addressed promptly and fairly.

To monitor compliance, the new rules include a provision for the DoLE regional, provincial, field, and satellite offices to oversee private establishments’ adherence to DO 239, series of 2023, which governs the administration and enforcement of labor standards.

The new rules will take effect 15 days after publication in at least two newspapers of general circulation. This timeline ensures that employers and employees are aware of their rights and obligations under the revised IRR.

The approval of the DoLE order, which now includes non-regular workers in the distribution of service charges, has been welcomed by a labor group. This move demonstrates a commitment to promoting fairness and inclusivity in the workplace.

In conclusion, the implementation of the revised IRR for RA 11360, the Service Charge Law, marks a significant step towards ensuring the fair distribution of service charges among workers. The new guidelines prioritize the equitable allocation of benefits, provide avenues for dispute resolution, and safeguard the rights of employees. By adhering to these regulations, establishments can foster a more harmonious and just working environment.

Source: The Manila Times

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