Regulation of the nature and destination of tips

Last August 3 of the current year, the Congress of the Republic sanctioned Law 1935 of 2018, by virtue of which the nature and destination of tips is regulated.

Its most relevant aspects are summarized in the following paragraphs:

1. Scope of Application:

The rule precisely indicates that the same is intended for all commercial establishments that provide the service of consumption of food, beverages, public shows, and any other place that involves the payment of a gratuity or there is room for it by determination of the customer, that is, when the same is not suggested by the establishment and the customer recognizes it.

2.Concept of Tipping:

The rule clearly states that the tip is a voluntary recognition made by the consumer that must consist of money and whose only recipients are the service personnel of the respective establishment due to the good service and product received.

3. Value of the Tipping:

The Law does not indicate in any of its articles the value of the tip. However, it does establish limits, criteria and methods to fix it, in such a way, it indicates that the value of the tip may be suggested by the establishment, but in this case, it may not exceed ten percent (10%) of the value of the service rendered and it must be accepted by the consumer.

A contrario sensu, the law clearly establishes that in case the tip is suggested by the consumer, it may be of any amount, whether greater or less than ten percent (10%) of the value of the service, even when there is an amount suggested by the establishment.

Additionally, the Law also establishes that the service personnel in charge of attending the consumer must ask the consumer about his willingness to include or not the value of the gratuity in the invoice or equivalent document, the only documents that must be delivered to the consumer for verification.

4. Nature and Purpose:

Given the raison d'être of tips, that is, to gratify the quality of the services and products received, the Law establishes the persons participating in the rendering of the service as the sole recipients of these and, in addition, attributes to them the possibility of agreeing on the form of distribution thereof, but in the absence thereof, the respective rule indicates that it must be done in an equitable manner.

Given the foregoing, the rule is appropriate to indicate that the owners or managers of the recipients of the rule are prohibited to intervene in the distribution of tips or to give a different destination to that already established, i.e., the benefit of those who participate in the chain of service provision.

5. Payment and Nature of Payment:

The regulation obliges employers to make the payment of these tips to the service personnel in any term as long as the same does not exceed the term of one (1) month.

It is important to specify that, according to the nature of the tips, and based on article 131 of the Substantive Labor Code, they do not constitute in any case a salary factor to be taken into account for social security contributions or payment of social benefits of the beneficiaries thereof.

6. Surveillance and Control:

Finally, foreseeing possible non-compliance with the above, it was decided to add numeral 19 to Article 59 of Law 1480 of 2011, by virtue of which it empowers the Superintendence of Industry and Commerce so that, within its administrative functions, it monitors what is related to the information provided to consumers on the voluntariness of the tip and, in addition, on the destination of this by the establishments in favor of their beneficiaries.

In case you require additional information on these items or other additional items, this office will provide the necessary advice and support on the subject.