Dear PAO,
I am a massage therapist, but I stopped working for about two years to take care of my now two-year-old son. It was only recently that I was hired by an agency, and I am assigned to work at a massage clinic in our province. According to my co-therapists, the clinic stopped hiring directly since early this year and has just been hiring through an agency although, at present, I am the only employee who is not directly hired by the clinic. I was wondering if I am entitled to a share in the service charge since I am not directly employed by the massage clinic. From what I remember at my old job, the agency-deployed therapists were not entitled to service charges. But, I heard from a radio program a few months ago that even those not directly hired are now entitled to service charges. Is this correct?
Felma
Dear Felma,
Republic Act (RA) 11360, which amended Article 96 of Presidential Decree 442 or the Labor Code of the Philippines, provides for the obligation of employers to distribute completely the service charges collected by them to all their employees, except to managerial employees. To be specific, the law provides:
“SECTION 1. Article 96 of the Labor Code is amended to read as follows:
“Art. 96. Service Charges – All service charges collected by hotels, restaurants and similar establishments shall be distributed completely and equally among the covered workers except managerial employees.
In the event that the minimum wage is increased by law or wage order, service charges paid to the covered employees shall not be considered in determining the employer’s compliance with the increased minimum wage. x x x”
Under the Department Order (DO) 206, Series of 2019, which provides for the Implementing Rules and Regulations (IRR) of RA 11360, massage clinics are part of the covered establishments under the law, but all non-managerial employees must be under the direct employ of the covered establishments. Section 2 of DO 206, Series of 2019, states:
“Section 2. Definition of terms. – As used in this Rules, the following terms are defined as follows:
“a. Covered employees refer to all employees, except managerial employees as defined herein, under the direct employ of the covered establishment, regardless of their position, designations or employment status, and irrespective of the method by which their wages are paid. x x x
“d. Other similar establishments refer to those entities that collect service charge for work or services rendered, such as, but not limited to, lodging houses, night clubs, cocktail lounges, massage clinics, bars, casinos and gambling houses, and sports clubs.” (Underlining supplied)
However, it bears emphasis that the Department of Labor and Employment (DOLE) issued a revised IRR. Department Order 242, Series of 2024, has superseded the provisions of DO 206, Series of 2019, and one of the nuances stated under this revised IRR is the expanded coverage of service charges distributions as the direct employment clause from the previous IRR has been removed. In effect, all non-managerial employees including those not directly hired by the principal employer, such as agency-hired workers and contractual workers, are now entitled to receive a share in the service charges collected by the covered establishments. Section 2 (a) of DO 242, Series of 2024 explicitly states:
“a. Covered employees refer to all employees, except managerial employees as defined herein, regardless of their position, designations or employment status, and irrespective of the method by which their wages are paid. x x x”
Applying the foregoing rules, we submit that you are entitled to a share in the service charges collected by your massage clinic even if you are not directly hired by them, provided that you are not holding a managerial position.
We likewise wish to impart the other nuances provided under DO 242, Series of 2024, such as the expansion of the channels for grievance resolution for those establishments without grievance mechanism or Collective Bargaining Agreement by the referral to the DOLE Regional, Provincial, Field or satellite office which has jurisdiction over the workplace (Section 6, id), and the directive to the DOLE Regional, Provincial, Field and satellite offices to monitor compliance to said Department Order (Section 8, id).
We hope that we were able to answer your queries. Please be reminded that this advice is based solely on the facts you have narrated and our appreciation of the same. Our opinion may vary when other facts are changed or elaborated.
Editor’s note: Dear PAO is a daily column of the Public Attorney’s Office. Questions for Chief Acosta may be sent to [email protected]
