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Are service charges included in determining compliance with minimum wage?

Photo from Unsplash | Yuri Krupenin

The following post does not create a lawyer-client relationship between Alburo Alburo and Associates Law Offices (or any of its lawyers) and the reader. It is still best for you to engage the services of a lawyer or you may directly contact and consult Alburo Alburo and Associates Law Offices to address your specific legal concerns, if there is any.

Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.


AT A GLANCE:

No. In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage. (Article 96, Labor Code as amended)


The law says – 

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.

In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage.

Who are covered employers?

All establishments collecting service charges such as hotels, restaurants, and other similar establishments, including those entities operating primarily as private subsidiaries of the Government. 

Who are covered employees?

All employees, except managerial employees as defined by law, under the direct employ of the covered establishment, regardless of their positions, designations or employment status, and irrespective of the method by which their wages are paid. 

Distribution of Service Charges  

All service charges actually collected shall be distributed completely and equally, based on actual hours or days of work or service rendered, among the covered employees, including those already receiving the benefit of sharing in the service charges. 

Frequency of Distribution

The service charges collected shall be distributed and paid to the covered employees once every two (2) weeks or twice a month at intervals not exceeding sixteen (16) days. 

Increase in Minimum Wage

In the event that the minimum wage is increased by law or wage order, the service charges paid to the employees shall not be considered in determining the establishment’s compliance with the increased minimum wage. 

 

(Article 96, as amended by RA No. 11360, 2022 Handbook on Workers’ Statutory Monetary Benefits)

Read also: Should Minimum Wage be the Same Across the Country?

Alburo Alburo and Associates Law Offices specializes in business law and labor law consulting. For inquiries regarding taxation and taxpayer’s remedies, you may reach us at info@alburolaw.com, or dial us at (02)7745-4391/0917-5772207.

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