Tips and Gratuities: New Law signed by the President to Protect Employee Tips.

25 July, 2022

 The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 (the “Act”) has now been passed by the Oireachtas and was signed by the President on the 20th of July 2022. While regulations are awaited to give effect to the Act, the Act is important as it aims to ensure that where tips are given that they are distributed fairly to employees.

The Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar has stated that

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.”

Treatment of certain tips and gratuities

Employers will be obliged to distribute to their employees any tips or gratuities received by the employer by an electronic mode of payment in a fair, transparent and equitable manner, and will not be allowed to retain any such share of tips or gratuities received electronically.

Employers will also be forbidden from describing mandatory charges as “service charges”, there they lead customers to believe that they will be distributed to employees unless they are treated in the same way as tips or gratuities. An employer may only retain a share of the tips or gratuities received by electronic means where the employer regularly carries out the same work as some or all of its employees.

The new law will also provide that tips received cannot be used for the purpose of calculating basic pay. 

Notices to be displayed

Employers will also have to display a notice outlining their policy on mandatory charges and the distribution of tips.

What’s Next

Consultations are due to begin shortly with employee and employer organisations, and new regulations prepared to give effect to the Act. Employers should begin to prepare policies and notices to ensure that they are ready when the regulations are enacted as failure to comply may lead, among other things, to summary convictions and fines.

For more information please do not hesitate to contract any of the Employment Team at Flynn O’Driscoll.

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