A tipping point? Contractuals won’t get share in service charges

Contractual workers will be excluded from a law meant to equally distribute the entire company’s earnings from service fees.

After reaching an agreement with stakeholders from the government, labor and management, this would be reflected in the implementing rules and regulations of the service charge law, Philippine Hotel Owners Association, Inc. (PHOAI) president Arthur Lopez said.

Lopez told reporters on the sidelines of this year’s Arangkada Forum there was a proposal to include contractual workers under the coverage of the law, but the hotel management group prevailed during the negotiations.

The law will essentially give workers in the hospitality sector the entire share of a company’s earnings from the service charge.

Based on the current setup, workers are getting 85 percent of the service charge, while the management keeps for itself the remaining 15 percent.

Even without the law, Lopez said workers were already getting a lot. On top of monthly salaries, regular workers each get P18,000 to P30,000 a month from the service charges collected from customers, depending on different variables, such as the number of hotel rooms.

The new law would mean a bigger take home pay for these workers.

PHOAI, which represents 250 hotel companies in the  country, said including contractual workers in the mix would essentially mean regular workers would be earning less.

Out of the 2 million workers employed by the hotel industry, 10 to 15 percent are contractuals who work in special occasions such as weddings, according to Lopez. This does not include the number of workers in the food and beverage services sector.

“We’re not getting anything out of it. What they wanted [is that] all the contractuals will be included. If you include all the contractuals, that will dilute the share of the regular employees in a very big way,” he said.

PHOAI does not have an estimate on the impact of the law to companies. But citing a hotel that has 600 rooms, for example, losing the 15-percent share of the service charge meant losing $2 million in a year.

Lopez said management would usually treat the 15-percent share of the service charge as part of its income or for expenses. To offset the impending loss, he said hotel management just needed to “improve productivity.”