Handbook on Workers' Statutory Monetary Benefits (2024)

Service Charges: Definition

Service charge refers to the amount that is added to the bill for work or service rendered.

Service Charges: Coverage

This applies to all employees of covered establishments, except managerial employees, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid.

Service Charges: Distribution of Service Charges

All service charges collected by covered establishments shall be distributed completely and equally, based on actual hours or days of work or service rendered, among the covered employees.

Service Charges: Frequency of Distribution

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

Service Charges: Increase in Minimum Wage

In the event that the minimum wage is increased by law or wage order, service charges paid to the employees shall not be considered in determining the establishment’s compliance with the increased minimum wage. See also DOLE Department Order No. 242, Series of 2024 or the Revised Implementing Rules and Regulations of Article 96 of the Labor Code of the Philippines, 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.” Issued on 01 February 2024. See also DOLE Labor Advisory No. 10, Series of 2020 entitled Clarification on the Effectivity Date of Republic Act. No. 11360 (issued on 28 February 2020). Republic Act 11360 was signed into law on 07 August 2019. It was published on 19 August 2019 in Manila Bulletin and Business Mirror, and took effect fifteen days after its publication or on 04 September 2019. As defined in Sec. 2(b) of DO 242-2024, covered establishments refer to those that collect service charges for work or services they offer. As defined in Sec. 2(c) of DO 242-2024, managerial employees refer to any person vested with powers or prerogatives to lay down and execute management policies or hire, transfer, suspend, lay-off, recall, discharge, assign or discipline employees or to effectively recommend such managerial actions.