A new law coming into effect from December 1 will ensure tips earned by employees in the service industry cannot be taken by management or used as a way to pay their wages.
The legislation under the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 will mean employers in industries such as food service and hairdressing are bound by law to clearly show their policy to customers on how gratuities are given out among staff.
Tánaiste, Leo Varadkar, said employers must have the required changes ready to go by December 1 in order to provide more clarity for customers.
“Tips can form a significant percentage of a worker’s take-home pay and these changes go a long way to ensuring those tips are distributed to the people who have earned them, Mr. Varadkar said.
“This new law is a positive step towards improving the rights and entitlements of lower-paid workers as well as providing transparency for customers.
“While most employers treat their staff fairly, this will help to stamp out bad practices, where they exist and give customers the confidence that gratuities are paid to staff.”
When announcing the changes back in July, the government confirmed that the Payment of Wages (Amendment) (Tips and Gratuities) Bill would specifically:
- provide clarity on the meaning of tips, gratuities, service charges and mandatory charges;
- place tips and gratuities outside the scope of a person’s contractual wages;
- oblige employers to display prominently their policy on mandatory charges and the distribution of cash and card tips,
- oblige employers to distribute fairly, equitably and in a transparent manner, tips that are received in electronic form, for example, through debit or credit cards or smart phones,
- ensure that any charge described as a ‘service charge’, or any other term that implies it is a charge for service, is distributed to employees in the same manner as tips received electronically.
The Bill requires the Minister for Enterprise, Trade and Employment to review the legislation after it has been in effect for one year - allowing the Minister to assess the effectiveness of the measures, and assess whether any further measures are necessary.
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