What is the Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022?

The Payment of Wages (Amendment) Bill is a piece of legislation that will require employers to clearly display their policy on how tips, gratuities and service charges are distributed. The Bill will strengthen the rights of employees by prohibiting the use of tips and gratuities to make up employees’ wages in full.

What does this Bill aim to achieve?

The aim of the Payment of Wages (Amendment) (Tips and Gratuities) Bill is to:

  • Provide a legal entitlement for workers to receive tips and gratuities paid in electronic form (including debit or credit card, smartphone or other electronic means), with a provision that these tips and gratuities should be paid out to workers in a fair and transparent manner. The employer must provide a statement to workers showing the amount of tips obtained in a period and the portion paid to the individual employee for that particular period.
  • Ensure the employer does not retain any share of tips received electronically, unless such retention is required, for example, to pay tax, or bank charges arising from providing electronic modes of tipping.
  • Require businesses to clearly display their policy on how tips, gratuities and mandatory service charges are distributed. In turn, employees and customers will be better informed about how tips are treated.

A fair and equitable distribution of tips will be context specific and is likely to consider staff working hours, value of sales income or revenue generated, a worker’s role in service delivery and whether the employee is on a full-time or part-time contract of employment.

Does this Bill include tips that are cash based?

Unfortunately, the Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022 only covers tips that are paid electronically and does not regulate cash tips. The Department of Enterprise, Trade and Employment stated that employers don’t control cash tips, and the Workplace Relations Commission (WRC) says it would be unworkable. However, the distribution of cash tips will be required to be included in an employer’s publicly displayed policy on the management of tips and gratuities. 

Are tips and service charges the same?

The majority of hospitality customers may be unaware that legally a hotel or restaurant is fully entitled to keep the ‘service charge’ that is often listed at the bottom of the bill receipt, as it is deemed normal business revenue. However, the proposed law continues the current status on mandatory service charges in which they are still business income. Consequently, Minister for Enterprise Leo Varadkar acknowledged “at the moment service charges are a grey area”. 

What sectors does the Bill apply to?

The main sectors the Bill will apply to are tourism, hospitality, hair and beauty, taxi, and delivery services, but legally it will apply in all settings. It’s not just applicable to restaurants and bars.