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Blog  »  Decemeber 2022
Dec 22

Posted by
Jennifer Patton

New Tips & Gratuities Bill in Effect As of Today!

As of today, December 1st 2022, a new law has come into effect to safeguard employees’ tips. Under this bill workers have a legal right to receive electronic tip payments in accordance with the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022, which also mandates that these payments be made fairly to employees.

Any fee labelled as a “service charge” or that could be reasonably expected to make a customer think it’s for service must be split among employees like a tip or gratuity would be. Factors such as an employee’s seniority or experience, the value of sales they generate, or the number of hours they work can all be taken into account when determining tip allocation. This act will primarily affect tourism, hospitality, hairdressing, taxis, and delivery services.

The act requires employers to post a tips and gratuities notice, and every employer must post information on how tips or gratuities and mandatory charges are shared or distributed to employees. It must be clear to the customers whether and how tips are distributed among employees. If an employer fails to comply with the posting requirements, they will be guilty of an offense and subject to a Class C fine of up to €2,500.

What is a “tip or gratuity”?

A ‘tip or gratuity’ is a voluntary payment made by a customer to, or left for, an employee or group of employees which they intended or assumed that the payment would be kept by the employee or shared with other employees.

What is an “electronic tip”?

An ‘electronic tip’ is a payment other than by cash. Examples include:

  • By debit / credit card
  • By smart card
  • By way of apps designed to facilitate payment of tips and gratuities
  • By means of a ‘push notification’ app
  • There will be no regulation of tips received by cash or other means.

So what do these changes mean for the employer and the employee?

  • Employers should now have their policy clearly displayed to customers on how cash and card tips, gratuities, and service charges are distributed.
  • Employers are prohibited from using tips to supplement statutory or contractual pay entitlements. Employers must ensure that tips and gratuities are distributed in addition to wages.
  • Employees will now be entitled to tips paid electronically via credit or debit card. Employers will be required to show the value of tips received during a timeframe as well as the portion paid to each individual employee during the timeframe. 
  • Employers must no longer keep tips for themselves unless they can show that they do a lot of the same work as the employees who get tips. The employer can only keep what is fair and reasonable in the situation, taking into account how much work was done during the time period.
  • Employers should note that only electronic payments are regulated. This is because the WRC has stated that the regulation of cash tips was not “workable”.
  • An employer must now include the policy regarding the distribution of tips or gratuities and service charges in the employee’s core terms and conditions of employment within 5 days of commencing employment.

The new rules apply to employers in the following service areas:

  1. The sale of beverages (including alcohol) or food for consumption on the premises at which such beverage or food is sold.
  2. The sale of beverages (including alcohol or food by means of casual trading.
  3. The accommodation of overnight guests on a commercial basis in a hotel, guesthouse, hostel, bed and breakfast, self-catering accommodation facility or any similar accommodation facility.
  4. Providing guided tours.
  5. Carrying out non-surgical cosmetic procedures including: cosmetic nail care; nail styling; skin care; hair care; hair styling; tattoo services; and piercing services.
  6. Gaming.
  7. The provision of services as a licensed bookmakers.
  8. Providing transport services by means of a public service vehicle other than services provided under a public transport services contract, services provided under a public bus passenger service licence, services provided exclusively for carrying children to or from a school.

What if an employee is not satisfied with the distribution of tips and gratuities?

While an employer must consult with employees on changes to the current way tips or gratuities are to be distributed, employee consent is not required and it is for the employer to decide on the policy they chose regarding the distribution of tips or gratuities.

If an employee is not satisfied with the distribution policy the employee may take a case to the Workplace Relations Commission (WRC) for adjudication as to whether the distribution is fair in the circumstances.

As for customers, they have the right to know what service charges are used for and who they go to.

From the 1st of December 2022, employers must clearly display their policy on how cash and card tips, gratuities and service charges are distributed. The ‘Tips and Gratuities Notice’ must clearly state:

  • Whether or not tips or gratuities are distributed to and among staff
  • The way they are distributed and the amounts distributed
  • Whether or not service charges (or any portion of them) are distributed and if so, how they are distributed and amounts distributed