Introduction:
The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 was signed into law on 20 July 2022. The Act, which requires a Ministerial Order to commence, will require employers in certain sectors to pass tips and gratuities received in an electronic mode of payment to staff. The Act will also prohibit employers from using these tips and gratuities to ‘make up’ an employee’s basic wage and will provide more information to consumers about how their money will be distributed should they decide to leave a tip.
Key Components of the Bill:
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- Employers will no longer be allowed to use tips to make up statutory or contractual pay entitlements. Tips and gratuities will be distributed only in addition to wages.
- Employees will now be entitled to tips paid electronically by credit or debit card. Employers will be obliged to show the value of tips received in a period and the portion paid to the individual employee for that period.
- The Act only regulates electronic payments. Cash tips are not included as this would not be considered ‘workable’ according to the Workplace Relations Commission (WRC).
- Employers will not be authorised to retain tips for themselves except where the employer can prove they perform, to a substantial degree, the same work performed by the employees who receive a share of electronic tips. The employer may only retain such amount that is fair and reasonable in the circumstances having regard to the amount of work performed during the period specified.
- Any charge labelled as a ‘service charge’ or charge for service must now be dealt with the same as any other electronic tip received.
- The Act requires employers to provide evidence of a clear policy, visible to the public on how the business deals with tips, gratuities and service charges.
- Templates on how to display policy on tips will be circulated to employers.
- The Minister for Enterprise, Trade and Employment must review the legislation after it has been in effect for one year.
Conclusion:
One of the main changes brought about by this Act is that it will eradicate certain bad practices that exist in areas such as parts of the hospitality sector. As society moves further away from regular cash transactions toward contactless payments, this protection for employees is absolutely necessary. The requirement for the employer to display a policy on tips publicly is also a welcome development for the consumer. This prevents any misleading of customers and gives the public the assurance that their money is reaching the person they intended to pay. For example, the Act removes any confusion surrounding the term ‘service charge’ and what this means. Overall, the Act is a positive development as it protects employees, informs the consumer and places little burden or cost on the employer.
For more information on this topic please contact Patricia Canty of our employment department on 021-7300200 or by email to pcanty@jwod.ie
