Press Release / Labor And Employment

Bill mandating establishments to give 100% of tips to employees moves to Senate plenary


Senator Joel Villanueva on Monday presented to the plenary Senate Bill No. 1299 or “An Act Providing that 100% of the Service Charge Collected in Hotels and Other Establishments Be Distributed to All Covered Employees and for Other Purposes” under Committee Report No. 189 making the proposed measure closer towards enactment.
Villanueva, chairperson of the Senate committee on labor, employment and human resources development, said that for more than 40 years now, hotel and restaurant workers have long been calling for the passage of a law that will make tips and service charge fully distributable to all employees.
Under Section 14 of Presidential Decree 850 signed in December 1975, the collection of service charge was optional but any amount collected shall be distributed 85% and 15% in favor of employees.
"Unfortunately, some establishments interpret this provision of 85% for the staff and 15% for the management as a “minimum standard”. There are claims that employers would stipulate in job contracts that 90% of the service charges will go to the management and only the remaining 10% goes to the employees," Villanueva said during his sponsorship speech.
Villanueva revealed that many establishment owners on the other hand, think that the distribution of service charge proceeds is a "management prerogative". The senator shared that in an informal survey of restaurants conducted by SparkUp, the multimedia platform of Business World, they asked a number of wait staff if they really do get their 85%, their response was “it’s the other way around.”
"Mr. President, our workers in this sector receive minimum wage. And our minimum wage is far from the necessary living wage to live decently. Nauunawaan natin ang National Union of Workers in Hotels, Restaurants and Allied Industries kung bakit ipinaglalaban nila na ibigay na sa mga manggagawa ang 100% service charge mula pa noong panahon ng Martial Law," Villanueva stressed.
Villanueva clarified that the bill does not make the collection of service charge mandatory to avoid interference with the right of management to exercise discretion in the operation of their business but for those who will collect them, they have to give the 100% of service charge to their workers. The senator further stressed that a mandatory imposition might be economically harsh to businesses who wish to keep their prices lower to be competitive.
“The proposed 100% service charge for our workers will benefit both the workers and the employers. Our minimum wage earners can receive additional compensation for good quality service,” the senator explained.
"Isang maganda at makabuluhang pamasko po ang pagpasa ng Senate Bill No. 1299 sa ating mga manggagawa sa mga restaurant, hotel at katulad na mga establisyemento," Villanueva said.