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23 May 2022

New law published to ensure tips are distributed fairly

New law published to ensure tips are distributed fairly

A new law has been published which will give customers clear information on where their tips and service charges go. 

Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar TD has published the new law which also prohibits the use of tips to ‘make up’ contractual rates of pay.

The Payment of Wages (Amendment) Bill will require employers to clearly display their policy on how tips, gratuities and service charges are distributed.

All electronic tips received by the employer must now be distributed fairly and in a transparent way and this will be inspected through the Workplace Relations Commission (WRC).

The distribution obligations will not affect businesses where tips are managed by employees themselves, for example under a ‘tronc’ system.

An employer may take into account certain factors when deciding how to distribute tips, including the seniority or experience of an employee, the value of sales generated by them and the number of hours worked. All employees must be consulted on the policy that is introduced. 

"The vast majority of employers do their best to ensure tips are distributed fairly among staff. This law will make sure that is the case across the board, giving employees a new legal right over their tips," the Tánaiste said.

"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," the Tánaiste said.

An important requirement of the new Bill, he said, 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," The Tánaiste said.

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