The Department of Labor and Employment revised the implementing rules and regulations of Republic Act No. 11360, or the Service Charge Law, on the first day of February to ensure the full and equal distribution of service charges to all covered employees of establishments collecting service charges.
The revised Department Order No. 242, series of 2024, broadened the coverage of service charge distribution by eliminating the 'direct employment clause' present in the earlier IRR. Additionally, the new regulations emphasize the preservation of existing benefits for covered employees, ensuring that the changes in service charge distribution do not result in any reduction in their current benefits.
"All employees are covered except 'managerial employees' as defined herein, regardless of their position, designation, or employment status, and regardless of how their wages are paid," stated in the new IRR.
A provision for resolving disputes regarding the distribution of service charges to covered employees has also been updated by expanding the dispute referral system to regional, provincial, field, or satellite offices with jurisdiction over the workplace.
The new IRR also includes conciliation through the Single-Entry Approach.
The updated Section 8 includes a provision for monitoring compliance, assigning DOLE regional, provincial, field, and satellite offices to oversee private establishments' adherence to Department Order No. 239, series of 2023, known as the Rules of Administration and Enforcement of Labor Standards pursuant to Article 128 of the Code.
Furthermore, the revised IRR maintains regulations for establishments collecting service charges, including the frequency of distribution, which is twice a month with no more than a 16-day interval, and prohibits designating service charges as part of the company's wage payment to comply with minimum wage laws.
DO No. 242 supersedes DO No. 206, series of 2019, which contained the previous IRR.