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Waiters, cooks & dishwashers up in arms over repeal of service charge fee

December 21, 2019

QUEZON CITY – Workers group Associated Labor Unions-Trade Union Congress of the Philippines (ALU-TUCP) score a recent move of some business owners to repeal the collection of the service charge fee being enjoyed by all contractual and rank-and-file employees in restaurant, hotel and other service-oriented enterprises.

The management move came after the law on service charge fee collection was amended by Republic Act 11360 otherwise known as An Act Providing That Services Charges Collected by Hotels, Restaurants, and Other Similar Establishments Be Distributed in Full to All Covered Employees. The law was enacted by President Rodrigo Duterte last month.

Before the amendment, 85% of the service charge collected by establishments would be distributed to employees while the 15% are collected for management discretion for losses and breakages.

Reduction of benefits

“The repeal of some restaurants, hotels and service-oriented business enterprises of the service charge benefit is not in the intention of the revised service charge law. The revised Service Charge Law of 2019 which was approved by President Duterte last month turns over 100% of the service fees to all rank-and-file employees does not mandate or obligates employers and business-owners to discourage them from adopting the scheme or to rescind the practice altogether. This is not the intention of the law. Rather, the intention of the law is to improve the quality of service of businesses by incentivizing and empowering the best efforts of the employees and improve the workplace working conditions,” said ALU-TUCP National Executive Vice President Gerard Seno.

Negatively impacted by the move are service industry workers including waiters, cooks, dishwashers, bartenders, customer assistants in restaurants. Other service industry workers affected are those working in gasoline stations, hotels, rest and recreation, and tourism.

DOLE must cure & correct flaw

The group said the management move clearly breaches the country’s numerous judicial jurisprudence on principles of non-diminution of benefits of workers particularly the non-wage benefits already been enjoyed by the workers.

“In behalf of the working people and before the reduction escalate industry-wide, we therefore call on the DOLE to make the corrective measure and make immediate steps to cure this diminution of benefit among rank and file employees. We urge the DOLE to issue a supplementary corrective administrative order which cures this reduction of benefit and encourages business owners to retain and adopt the scheme that both improves the brand of service of the business and compensate the service the employees has rendered,” Seno said.

Diminution creates workplace tension

ALU-TUCP spokesperson and advocacy officer Alan Tanjusay said some of these employees have approached them in person and through social media seeking assistance are furious over the development.

“The management's repeal of collection of the service charge fee will create tension in the workplace and hurt the relationship between employees and their bosses. It will certainly cause demoralization among the working force and impact on employee's productivity which will surely yield poor employees' output and adversely affects the unique quality brand of service that customers look for in the establishments. Thus, the repeal of collection of service charge fees constitute a diminution of benefit,” Tanjusay said.

Service charge augment minimum wage

According to the group, the service charge fee substantially helps take home pay of service-oriented industry workers.

“Since the country’s standard minimum wage rate is small and inadequate, management, business-owners must understand that lowly-paid waiters, cooks, dishwashers, order-takers and customer assistants and all other service industry workers look forward to the service charge collection because it substantially augment their take home pay. If this is remove, workers are in low morale,” Tanjusay said.

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