The Subic Freeport is host to numerous hotels, restaurants, eateries, malls, clubs and similar tourist establishments that deal with service charges, an additional income for employees of these businesses. The same is true with Clark in Pampanga. The Clark sub-region of Central Luzon now boasts of the Freeport zone, the Clark Global City, New Clark City, and the Clark International Airport.
Being both business, commercial, cultural and entertainment hubs, the Subic Freeport as administered by the SBMA and the Clark sub-region managed by the Clark Development Corp. are most impacted by the new rules released by the Department of Labor and Employment (DOLE) about service charges.
The DOLE has issued the implementing rules and regulations (IRR) of Republic Act 11360 or the Service Charge Law that provides for the full and equal distribution of service charges among workers of hotels, restaurants, and other establishments. This revised IRR is contained in Department Order (DO) 242, series of 2024 issued on Feb. 1.
The DOLE said the new IRR, which supersedes DO 206, series of 2019, was coherent with the legislative intent of full and equal payment of service charges to all covered employees of service charge-collecting establishments. The new guidelines deleted the phrase "under the direct employ of covered establishments" in Section 2 (a) of the old rules.
The amendment aims to improve the distribution of service charges to cover all employees, including those not directly hired by the principal employers, such as "contractual, non-regular or agency workers" serving the covered establishments.
“Covered employees refer to all employees, except managerial employees as defined herein, regardless of their position, designation, or employment status, and irrespective of the method by which their wages are paid,” read the new IRR.
Under the Service Charge Distribution rules, managerial employees are not covered to partake in the distribution of service charges, directing more financial benefits to rank-and-file and supervisory level employees, or those "regardless of their position, designations, or employment status, and irrespective of the method by which their wages are paid."
All collected service charges will be evenly distributed among employees, on a bi-monthly basis. The distribution will be proportional to the hours or days of work or service rendered, ensuring fairness and transparency in the allocation of these funds.
This revised IRR should guide all service sector employers in Subic and Clark, such as hotels, restaurants, lodging houses, nightclubs, cocktail lounges, massage clinics, bars, casinos and gambling clubs, golf and sports clubs, among others – to comply for a peaceful and progressive business climate.
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