Labor Standards 7 - Masterclass 2024

Summary

This video script discusses the provisions surrounding service charges under the Labor Code, as amended by Republic Act 11360. It explains that service charges are additional pay collected by establishments such as hotels and restaurants, distributed to non-managerial employees. The distribution is done equally based on the actual days or hours worked, with adjustments for absences or tardiness. It also clarifies that service charges are separate from wages and do not count toward minimum wage compliance. Additionally, service charges must be paid twice a month, with intervals not exceeding 16 days, and are treated as a gratuity, not part of base compensation.

Takeaways

• 😀 Service charge is an additional payment collected by establishments and distributed to covered employees based on their actual hours or days worked.
• 😀 Covered employees are all employees except managerial staff. This includes workers of all positions and employment statuses, such as probationary, casual, or fixed-term employees.
• 😀 Establishments that collect service charges, like hotels and restaurants, are required to distribute them to eligible employees. This is indicated by the service charge component on customer receipts.
• 😀 The distribution of service charges must be done completely and equally among covered employees, with no preferential treatment for specific roles or positions.
• 😀 Employees with absences or tardiness will receive a reduced share of service charges, with the unallocated amount being redistributed to other employees.
• 😀 To be entitled to service charges, employees must be non-managerial, and the establishment must be actively collecting service charges.
• 😀 The service charge is paid twice a month, with intervals not exceeding 16 days. It can be distributed on separate days from the regular payday.
• 😀 Service charges are considered additional pay, similar to tips or gratuities, and should not be counted as part of the minimum wage when calculating compliance with wage laws.
• 😀 Establishments may choose not to collect service charges for various reasons, including customer preference or to maintain competitive pricing.
• 😀 Supervisors, though not considered managers, are entitled to receive a share of service charges, as the distinction is strictly between managers and non-managers.
• 😀 The payment and distribution of service charges are meant to benefit the employees and should be managed transparently, with the collected charges shared equally according to service rendered.

Q & A

What is the definition of service charge under the Philippine Labor Code as amended by Republic Act 11360?

A service charge is an additional payment collected from customers by covered establishments (such as hotels and restaurants) and distributed among covered employees.

Who are considered 'covered employees' eligible for service charge distribution?

Covered employees are all workers in an establishment, except managerial employees. This includes workers of all positions, employment statuses, and payment methods, as long as they are not managerial staff.

Are managerial employees entitled to service charges?

No, managerial employees are excluded from receiving service charges.

What establishments are required to collect and distribute service charges?

Establishments that collect service charges include hotels, restaurants, and other similar businesses, including private subsidiaries of the government.

How should service charges be distributed among employees?

Service charges should be distributed equally among all covered employees, based on the hours or days worked. This ensures fairness, but adjustments are made if an employee has absences or tardiness.

What happens if an employee has absences or tardiness? Do they still receive service charges?

Employees with absences or tardiness will receive a reduced share of the service charge, with the undistributed amount being equally distributed among other employees who were present.

What are the conditions for entitlement to service charges?

To be entitled to service charges, an employee must be a covered employee (not a managerial staff), and the establishment must actually collect service charges.

How often should service charges be distributed?

Service charges should be distributed twice a month, with intervals not exceeding 16 days. For example, they can be distributed on the 5th and 20th of the month.

Do service charges count towards the minimum wage requirement?

No, service charges are considered additional pay and are not included in the calculation of minimum wage compliance. They are treated separately from base wages.

Why do some establishments choose not to collect service charges?

Some establishments may choose not to collect service charges to avoid burdening customers and to encourage repeat business, although they may not be able to provide additional compensation to employees as a result.