Lawmakers push for bill to give service sector employees 100% of collected service charge

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Metro Manila (CNN Philippines, December 5) — A bill intended to give service sector employees 100 percent of collected tips has been submitted to plenary.

Senate Bill No. 1299, or "An Act Providing that 100% of the Service Charge Collected in Hotels and Other Establishments Be Distributed to All Covered Employees and for Other Purposes" was introduced by Senator Joel Villanueva on Monday.

Villanueva is the chairperson of the Senate committee on labor, employment and human resources development.

The bill said rank-and-file employees of the service sector receive only 85 percent of the service charge paid by customer in hotels, restaurants, and similar establishments.

"Unfortunately, some establishments interpret this provision of 85 percent for the staff and 15 percent for the management as a "minimum standard,"" Villanueva said in his sponsorship speech. "There are claims that employers would stipulate in job contracts that 90 percent of the service charges will go to the management and only the remaining 10 percent goes to the employees."

For more than 40 years, hotel and restaurant workers have long been calling for the passage of a law that will make tips and service charges collected fully distributed among all employees.

Under Section 14 of Presidential Decree 850 signed in December 1975, the collection of service charge was optional, but any amount collected shall be distributed 85 percent and 15 percent in favor of employees.

Villanueva said the bill does not make the collection of service charge mandatory, but should establishments collect it, its total must be given to workers.

In her co-sponsorship speech, Senator Grace Poe said these employees are often under short-term contracts.

"This bill will help establish an enabling environment to ensure that we provide decent jobs with fair pay to employees in the service sector," she said.

She added giving employees 100 percent of service charges would not only help augment their income, but also "act as an incentive for them to do better."

The push for the bill comes after the Senate approved the tax reform bill on November 28 which will increase the number of lower-income Filipinos exempted from paying income tax.

READ: Senate OKs tax reform bill on final reading

Under the Senate version of the package, taxpayers with an income of ₱250,000 and below annually will be tax-exempt starting 2018. This includes self-employed individuals and professionals.

The House of Representatives' version of the tax reform package also has a tax exemption ceiling of ₱250,000.

This translates to income tax exemptions for those earning approximately ₱21,000 or less per month.

Under the present tax scheme, a taxpayer earning ₱250,000 per year pays an income tax of ₱50,000 annually.

CNN Philippines Senior Correspondent Cecille Lardizabal, and Digital Producers Amanda Lingao and Pia Garcia contributed to this report.