Labor Code · Working Conditions and Rest Periods · Chapter III – Holidays, Service Incentive Leaves, and Service

Article 96

Service Charges

Amended
By RA 11360 (2019)

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.

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 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 polices or hire, transfer suspend, lay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.

Editor’s notes from DOLE (1)

Amended by R.A. No. 11360 (2019), “An Act Providing that Service Charges Collected by Hotels, Restaurants and Other Similar Establishments be Distributed in Full to all Covered Employees, Amending for the Purpose Presidential Decree No. 442, as Amended, Otherwise Known as the “Labor Code of the Philippines.” See DOLE D.O. No. 206 (2019) for specific regulations. See also DOLE LA No. 10 (2020).

Text and numbering follow the Department of Labor and Employment's 2022 edition of Presidential Decree No. 442, as amended and renumbered under DOLE Department Advisory No. 01, series of 2015. Former article numbers are shown in brackets. Notes are DOLE's editorial notes. Amendments after that edition are not included. For information and research only, and not legal advice. For certified copies, refer to the Official Gazette or the issuing agency.