New Regulations on Service Charge Law Released by DOLE

Revised Guidelines for Fair Distribution

The Department of Labor and Employment (DOLE) has introduced new regulations on the Service Charge Law under Republic Act (RA) 11360.

These guidelines, outlined in Department Order (DO) 242, series of 2024, supersede the previous DO 206, series of 2019. This latest amendment aims to ensure equitable distribution of service charges among employees.

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Inclusion of All Eligible Employees

The updated rules on the Service Charge Law significantly change how service charges are distributed.

Under the revised law, covered establishments no longer need to directly employ employees for them to receive service charges. This change enables all workers, including contractual and agency employees, to receive service charge distributions.

Eligibility Criteria

The new regulations on the Service Charge Law mandate that establishments distribute a portion of the service charges collected to all employees, excluding managerial staff.

This ensures that establishments direct financial benefits towards rank-and-file and supervisory level employees, regardless of their employment status or method of wage payment.

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Structured Distribution and Grievance Mechanism

Employers will evenly distribute service charges among employees bi-monthly, proportionate to their worked hours or days.

Furthermore, the new guidelines of the Service Charge Law specify that workers, regardless of union affiliation, can file grievances about service charge distribution and seek assistance from DOLE if necessary.

Preservation of Existing Benefits and Dispute Resolution

The new regulations on the Service Charge Law emphasize the non-diminution of existing benefits for covered employees.

It also provides a dispute resolution mechanism at various levels of DOLE jurisdiction. Compliance monitoring by DOLE offices is also mandated to ensure adherence to the new rules.

Implementation Timeline

The new rules will take effect 15 days after publication in two newspapers of general circulation, signaling a prompt transition to the updated regulations.