A new law now prevents employers using tips to ‘make up’ rates of pay on contracts 10 months ago

A new law now prevents employers using tips to ‘make up’ rates of pay on contracts

Customers giving tips in Ireland will now know exactly where it goes.

A new law has been published to give greater transparency to customers on where their tips and service charges go.

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The Payment of Wages (Amendment) Bill, published on Monday by Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar, will require employers to clearly display their policy on how tips, gratuities and service charges are distributed.

It also prohibits employers from using tips to 'make up' contractual rates of pay for employees.

All electronic tips received by an employer must be fairly and transparently distributed under the new law and will be inspected through the Workplace Relations Commission.

However, where tips are managed by employees, there will be no distribution obligations.

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

  1. Place tips and gratuities outside the scope of a person’s contractual wages.
  2. Oblige employers to display prominently their policy on the distribution of both cash and card tips and service charges. The customer will be better informed about how tips are treated.
  3. Oblige employers to distribute fairly and transparently all tips that are received in electronic form i.e. through cards or smart phones.

“The vast majority of employers do their best to ensure tips are distributed fairly among staff," Varadkar said.

"This law will make sure that is the case across the board, giving employees a new legal right over their tips.

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“For customers then, I know most people are unsure about where their tips go and what the difference between a tip and a service charge is. From now on, establishments will be required to clearly show how everything is distributed and where it goes. This goes for whether you pay by cash or card.

“An important requirement of the new Bill is that the employer must provide a statement to workers showing the amount of electronic tips obtained in a period and the portion paid to the individual employee for that particular period. This will ensure transparency.

“This is one of five new workers’ rights I am bringing in as Minister this year. I am determined to make better working conditions a legacy of the pandemic. I firmly believe that this is necessary to recruit and retain the staff we will need to drive our enterprise economy forward.

"We will, of course, be sensitive to issues such as cost and competitiveness.”

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