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New law on the way to protect employee tips and give customers transparency after Oireachtas gives approval -Tánaiste

Significant rights for staff in hospitality and personal services are on the way after the Oireachtas passed new legislation, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar has confirmed.

The Payment of Wages (Amendment) (Tips and Gratuities) Bill was passed in both Houses of the Oireachtas yesterday.

The new law will ensure that tips and gratuities are distributed fairly to staff. Employers will also be prohibited from describing mandatory charges as “service charges” unless they are treated in the same way as tips or gratuities.

The Tánaiste said:

“This is an important new right for staff in the hospitality and personal services sectors. Most companies look after their staff very fairly, but this new law will stamp out bad practices where they do exist and ensure that tips are distributed fairly among staff. It will also mean that tips received cannot be used as part of basic pay.

“We’re all familiar with tips and service charges, but it’s not always clear how they are allocated to staff, especially if paying by phone or debit card. The Payment of Wages Act will ensure that the tipping and gratuities policy is displayed clearly in any establishment.

“I’d like to thank Senator Regina Doherty, who initiated the Bill, and all of the Senators and Deputies whose input shaped the final legislation that was passed this evening. Thanks also to the Select Committee on Enterprise, Trade & Employment for the swift passage of the Bill through the Dáil this month. It means employees and customers will be able to benefit from these new rules very soon.”

This new law builds on the suite of legal rights that the Government is introducing to protect workers, which includes the Sick Leave Bill, the Transparent and Predictable Working Conditions Directive and the right to request remote work. The new measures will be enforced through the Workplace Relations Commission (WRC). 

Consultations will start shortly with employee and employer organisations, leading to new Regulations which will give effect to the Act

Further information

The Payment of Wages (Amendment) (Tips and Gratuities) Bill will specifically:

  • provide clarity on the meaning of tips, gratuities, service charges and mandatory charges
  • place tips and gratuities outside the scope of a person’s contractual wages
  • oblige employers to display prominently their policy on mandatory charges and the distribution of cash and card tips
  • oblige employers to distribute fairly, equitably and in a transparent manner, tips that are received in electronic form, for example, through debit or credit cards or smart phones
  • ensure that any charge described as a ‘service charge’, or any other term that implies it is a charge for service, is distributed to employees in the same manner as tips received electronically

The new law will give employees a legal entitlement to receive tips and gratuities paid in electronic form, and requires that these tips and gratuities should be paid to workers in a fair, transparent and equitable manner. A fair and equitable distribution will be context specific, taking account matters such as hours worked, value of sales income or revenue generated, the worker’s role in service delivery and so on.

The Bill requires the Minister for Enterprise, Trade and Employment to review the legislation after it has been in effect for one year. This will allow the Minister to assess the effectiveness of the measures, and assess whether any further measures are necessary.