Government Approves The Payment of Wages (Amendment) Bill to Protect Employee Tips and Give Customers Transparency

Home » Legislation Updates » Government Approves The Payment of Wages (Amendment) Bill to Protect Employee Tips and Give Customers Transparency

The Tánaiste and Minister for Enterprise Trade and Employment, Leo Varadkar, has approved ‘The Payment of Wages (Amendment) Bill’ that will give new rights to employees – forbidding the use of tips and gratuities to make up contractual rates of pay.

Employers will have new requirements to clearly display their policy on how card and cash tips, gratuities, and service charges are distributed. All electronic tips must now be distributed fairly and in a transparent way.

Leo varadkar

Mr Varadkar said: “This new law will, for the first time, give workers legal protections over tips. It will mean that any tips received cannot be counted towards an employee’s basic pay and they must be counted as additional and separate payments.

“Once this law is enacted, all employers will be required to show clearly how tips and service charges are dealt with in a business. This will provide clarity for both customers and staff. Most establishments already treat their employees fairly concerning tips, so for many it will mean no change other than having to display their policy clearly.”

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

Provide clarity on the meaning of tips, gratuities and service charges. Place tips and gratuities, but not service charges, outside the scope of a person’s contractual wages. Oblige employers to display their policy on the distribution of both cash and card tips prominently.

Oblige employers to distribute fairly, equitably and transparently, tips that are received in electronic form, that is, through debit or credit cards, or smartphones.

Key points to note for employers:

  • The law will give employees a legal entitlement to receive tips and gratuities paid in electronic form (i.e. debit/credit card) and states that these tips and gratuities should be paid out to workers in a fair, transparent and equitable manner.
  • There will be new requirements for employers to clearly display their policy on distributing card and cash tips, gratuities, and service charges. All electronic tips must be distributed fairly and in a transparent manner.
  • A fair distribution will be context-specific, taking into account matters such as staff hours; the value of sales income or revenue generated; a worker’s role in service delivery; whether the employee is on a full-time or part-time contract of employment, etc.
  • Payment of tips and gratuities by electronic means, in contrast to cash tips paid directly to the worker, means that the employer controls how these tips and gratuities are distributed. The WRC will be responsible for inspecting electronic tips and distributing them fairly. Employers must clearly display their policy on cash tips publicly.

HR Team Director, Breda Cullen, said: “This new law builds on the extension of legal rights that the Government is introducing to protect employees. These include the Right to Request Remote Work, the Sick Leave Bill, and the Transparent and Predictable Working Conditions Directive.

“Employers are strongly advised to remain up to date with the dynamic changes in legislation and update employment contracts where required to maintain compliance with employment law.”

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