Under Article 134 of the Labor law, tips are remuneration made by clients to personnel of certain establishments such as hotels, restaurants, cafés, bars,and hair salons, and received by the employer as a mandatory percentage added to the client’s bill with a note “service charge”. These tips must be collected by the employer and distributed in full to the personnel in contact with the clientele.
The employer must clearly justify the receipt and the payment to his staff of the amount of tips. (Article 135, Labor Law) The method of dividing tips and determining the categories of personnel who should receive them are established by the customs of the occupation or, if not applicable, by a Prakas the Ministry in charge of Labor. (Article 136, Labor Law).
In case 11/03, the arbitration council ruled that 10% mandatory service charge is”Praktoneanukroh” as defined in Art 134 of the Labor Law. Any such service charge collected by the employer must be fully distributed monthly to the workers who have contact with customers and workers must get that money as of right and not at the discretion of an employer.