Employers face on-the-spot fines for not passing on tips

The law also obliges restaurants to prominently display their policy on the distribution of cash and card tips. Picture: iStock

Employers who breach new legislation governing how hospitality workers receive tips and gratuities now face on-the-spot fines of up to €1,500.

Under new rules, which come into effect immediately, inspectors from the Workplace Relations Commission (WRC) who find breaches of the law in relation to the payment of tips while inspecting a restaurant, bar, or other establishment can impose on-the-spot fines of up to €1,500.

Previously, employers were liable to fines of up to €2,500 but a prosecution resulting in a summary conviction in the District Court had to be taken.

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022, came into effect in December 2022. Since then, the Workplace Relations Commission has been conducting inspections of premises to make sure workers are getting their tips.

“While the majority of employers are in compliance with rules and regulations surrounding the treatment of tips, the introduction of these fines provides another layer of protection for hospitality workers and will help to stamp out bad practices where they exist,” said Neale Richmond, junior minister at the Department of Enterprise, Trade and Employment.

Before December 2022, no law existed obliging employers to pass on tips received by their staff. This left a customer unaware whether or not the tip left would be received by the intended person. The worker, similarly, had no protection if their employer chose to keep some or all of their tips.

The laws passed by the Oireachtas placed tips and gratuities outside the scope of a person’s contractual wages, obliged employers to display prominently their policy on the distribution of cash and card tips, and obliges employers to distribute tips in a fair manner when a customer pays by card.

Furthermore, anything deemed a “service charge” must be distributed to staff as if it was a tip or gratuity.

Staff can make a complaint to the WRC in cases where there are unlawful deductions from tips. When such a complaint is upheld, an employee can be awarded compensation of up to four weeks’ wages.

A mid-year review by the Department of Enterprise found more than 100 breaches of the new laws but a large majority complying with them.

Under the law, employers who do not provide employees with the terms of their employment or provide false information will receive a fine of €1,500.

Employers who do not provide employees with a written statement on the distribution of tips and gratuities, or who fail to treat a service charge as a tip, will be subject to a fine of €750.

And, if employers do not display a ‘tips and gratuities notice’ or a ‘contract Workers tips and gratuities notice’, they will be fined €500.

If the fine is paid, no further action will be taken by the WRC. If it is not paid, however, the WRC will decide whether to proceed with a prosecution.

A further review is being prepared by the department as to the effectiveness of the legislation so far.

“We believe in putting money back into people’s pockets, this includes allowing workers to keep their hard-earned tips,” Mr Richmond added. 

“Not only do the workers deserve to keep the tips they earn, but customers who are paying these tips deserve to know where their money is going.”