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AT A GLANCE:
Article 96 of the Labor Code, as amended by R.A. No. 11360, provides that all service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.
Article 96 of the Labor Code, as amended by R.A. 11360, states that:
“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.
“In the event that the minimum wage is increased by law of wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum age.
“To facilitate resolution of any dispute between the management and the employees on the distribution of service charges, a grievance mechanism shall be established. If no grievance mechanism is established or if inadequate, the grievance shall be referred to the regional office of the Department of Labor and Employment which has jurisdiction over the workplace for conciliation.
“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.”
The Department of Labor and Employment issued Department Order No. 242, series of 2024 (DOLE DO 242-24) setting forth the Revised Implementing Rules and Regulations of Article 96 of the Labor Code as amended by Republic Act No. 11360 entitled “An Act Providing that Service Charges Collected by Hotels, Restaurants and Other Similar Establishments be Distributed in Full to All Covered Employees”.
DOLE DO 242-24 provides that the rules shall apply to all establishments collecting service charges such as hotels, restaurants, and other similar establishments including those entities operating primarily as private subsidiaries of the Government. (Section 1, DOLE Do 242-24.)
All service charges collected by covered establishment shall be distributed completely and equally, based on actual hours or days of work or service rendered among covered employees. (Section 3, Id.)
Who are covered employees? Covered employees refer to all employees, except managerial employees, regardless of their position, designations, or employment status, and irrespective of the method by which their wages are paid. (Section 2, par. a, Id.)
The shares referred to in DOLE DO 242-24 shall be distributed and paid to the covered employees not less than once every two weeks or twice a month at intervals not exceeding sixteen (16) days. (Section 4, Id.)
In the event that the minimum wage is increased by law or wage order, service charges paid to covered employees shall not be considered in determining the covered establishment’s compliance with the increased minimum wage. (Section 5, Id.)
The rules under DOLE DO 2442-24 shall not be construed to diminish existing benefits under present laws, company policies, and collective bargaining agreements. (Section 7)
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