Law of “Tips”- Law 1935 of August 3rd, 2018
The purpose of this law is to prevent the owners of commercial establishments from appropriating the money from the tips that the consumers recognize for the good service rendered.
To whom does this law applies?
- This law applies to all commercial establishments dedicated to the provision of food service, beverages and / or public entertainment, and any other suggested tip payment or where there is room for it when the customer or consumer so determine it.
What should be understood by “tip”?
- The law defines “tips” as the recognition of voluntary money by the consumer and in favor of people who are part of the chain of services of commercial establishments, which is delivered for the good service and product received, regardless of the value of registered sale.
Should tips be part of the salary?
- The Law is clear in confirming that tips are not wages, so they should not be considered when making contributions to the General Social Security System, nor for the calculation of social benefits or other work credits linked to salary.
How should tips be distributed?
- The beneficiaries are, exclusively, the people that form part of the chain of services, composed by the personnel involved in the provision of the service to the consumer.
- If an agreement is not reached between the members of the service chain, the tips should be distributed equally among them. The employer/company will be autonomous in the terms to distribute the money of the tips but foreseeing that this period does not exceed the month.
- Employers/The Company cannot intervene in the distribution of tips money, nor allocate any part of them to expenses that by their nature correspond to the establishment of trade or retain the worker money for tips.
What is the amount of tips? Is it still voluntary?
- The tip cannot exceed 10% of the value of the service provided when it is suggested by the business establishment.
- Tips are still voluntary and should be informed to consumers in such a way. The Superintendency of Industry and Commerce will indicate the instructions regarding how consumers should be informed about the prices and the voluntary nature of the tip, as well as the right they have not to pay or modify the suggested percentage.
What powers does the Superintendence of Industry and Commerce have?
- As already mentioned, this entity is empowered to monitor what is related to the information provided to the consumer on the voluntariness of the tips, and its effective destination by commercial establishments.
- If employers do not comply with the provisions of this Law, the Superintendency of Industry and Commerce is empowered to impose economic sanctions in case of non-compliance.
By: Melissa Rumié
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