DOLE Issues Amended IRR on Service Charge Law in the Philippines
The Department of Labor and Employment (DOLE) has issued the amended implementing rules and regulations (IRR) of the Service Charge law, In which managerial staff are no longer eligible to receive benefits from the collected service fee.
In the two-page department order, DOLE stated that the IRR covers “all employees, except managerial employees, regardless of their position, designation or employment status, and irrespective of the method by which their wages are paid.”
“The rules 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.”
The new IRR defines managerial employees as “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.”
The department order signed by Labor Secretary Bienvenido Laguesma noted, “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.”
In addition, Laguesma mentioned, “The shares referred to herein 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.”
The labor group Federation of Free Workers welcomed the new IRR. In a statement, the group cited, “new rules are expected to increase the take home pay of workers in the service industry as they are intended to improve distribution of service charges to all employees, now excluding managerial employees.”
It is stated that the amended IRR is an exclusive advantage for non-managerial employees.
Moreover, the group stated, “We urge all service sector employers – like those in hotels, restaurants, lodging houses, nightclubs, cocktail lounge, massage clinics, bars, casinos, gambling clubs and golf and sports clubs, among others – to comply with these new regulations promptly.”
The Federation of Free Workers also reminded employers to work collaboratively with the unions and their employees in order to have a smoother transition to the system.