New law to ensure tips go to workers ahead of Christmas season

New laws to ensure workers receive tips paid by customers will come into effect on December 1.

The Payment of Wages (Tips and Gratuities) Act 2022 will come into effect in four weeks’ time before the busy Christmas period in hospitality, Tánaiste Leo Varadkar has confirmed.

The new law gives employees a legal entitlement to receive tips and gratuities paid in electronic form and requires that these tips and gratuities should be paid to workers in a manner that is "fair in the circumstances".

Anything called a ‘service charge’ or otherwise described in a way that would lead a customer to believe it is a charge for service, will have to be distributed to staff as if it were a tip or gratuity in the traditional sense. 

The main sectors to which the act will apply are tourism, hospitality, hairdressing, taxis, and delivery services.

These sectors attract a significant percentage of young people, students, females, and migrant workers for whom English is very often not their first language.

The act provides for the display of a tips and gratuities notice and every employer will be required to display information on the manner in which tips or gratuities and mandatory charges are shared or distributed to employees.

It must be made clear to customers whether tips are distributed among employees and how they are distributed.

Employers must also make clear whether mandatory charges, or any portion of them, are distributed to employees, and give details on how this is done.

An employer who contravenes the display obligations will be guilty of an offence and liable on summary conviction to a Class C fine up to a maximum of €2,500.

There will be a four-week period between now and December 1 to provide employers with a lead-in time to prepare for the changes required by the new law which have been well-signalled in advance.

There will be a review of the legislation after it has been in effect for one year.

Speaking about the act, Tánaiste Leo Varadkar said the 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,” he said.