To Tip Or Not To Tip?: Demystifying Service ChargeJanuary 2, 2020
Those of us who like to eat out are probably familiar with a certain conundrum that ensues once the bill arrives and no, it’s not about whether you or your bombshell of a date should be the one to foot the bill. (This isn’t exactly the blog to consult for that sort of thing because we, or at least I, don’t know the answer to that either.). Whether your server was perfectly charming or perfectly smelly nasty, deciding whether to tip or not can also depend on whether the words “service charge” appear on your bill.
What is Service Charge Exactly?
A service charge is basically an additional fee charged by a service establishment (e.g., restaurants or hotels) on top of your bill. While service charges in general are accrued to cover a variety of miscellaneous business expenses, but their most common purpose is to contribute to a service employee’s wages.
In a nutshell, it’s like a mandatory tip of sorts.
How is Service Charge Computed?
In the Philippines, the service charge is usually comprised of a percentage of the total bill (anywhere between 10-15%).
Does It Go Directly to the Employees?
Mostly, yes. Under the law (Article 96 of the Labor Code of the Philippines, if you want to be specific about it), 85% of the total service charges collected should be split equally among all the service employees. Yep, everyone from the guy working the churros machine to the perfectly-coiffed receptionist working the reservation list gets the same share out of the pooled service charges.
What happens to the other 15%? Well, that bit is allotted for managerial employees.
Are Service Charges Part of an Employee’s Wage?
Service charges are not included in an employee’s basic wage, but are added on to such.
Incidentally, if the establishment were to stop collecting service charges, they would be required to provide their employees with the average amount of service charges (in addition to their basic wage) that the latter received in the last twelve months.
Do You Still Need to Tip Even if There’s a Service Charge on Your Bill?
Tipping isn’t exactly mandatory in the Philippines, but no one will stop you if you wanted to reward your server for say, single-handedly bringing your party of 15 all your dégustation courses (and managing to do it all without tripping of breaking a sweat throughout the evening). Unlike in other countries, there isn’t really a standard percentage for tipping. So, it’ll all depend on your generosity discretion.
On the flip side, it’s probably fine for you to “forget” to leave a tip if your waiter kept calling your girlfriend “babe” throughout the dinner service.
Are Tips Distributed in the Same Way as Pooled Service Charges?
It all depends on the restaurant owner and/or manager’s discretion. Some prefer to pool the tips and then distribute them evenly among the staff at the end of the shift as a collective reward for a good group effort. Some allow the individual servers to keep the tips directly given to them as an incentive for maintaining an exemplary level of service.
Given that local culture favors sharing, however, the former is practiced more frequently.