Irish Examiner view: Tipping point for a fair distribution of gratuities 

The latest Payment of Wages Act is a formal recognition of the entitlements of people working in the service industry

Among the measures in Ireand's new Payment of Wages Act, employees must be given gratuities and tips included in cashless payments. Stock picture: Simon Dawson/Bloomberg

For many years, stories of the Irishman abroad and his first encounter with the tipping habits of other nations were the epitome of the culture clash. Misunderstandings and rapprochements abounded as the necessity of adding 10% or 15% to a bill was explained in those stories — until eventually they were so widespread that it was impossible to believe anyone leaving these shores could be surprised by the need to tip.

The proof is in the universal acceptance of tipping as a practice in Ireland itself. New legislation now makes it a legal requirement for employees to receive tips even if those are paid electronically rather than in cash.

The Payment of Wages Act means that, as of yesterday, employees must be given gratuities and tips which are included in payment for services via electronic means, a necessary recognition of the general move in the last couple of years away from cash thanks to the pandemic — and, by definition, the general move away from the old practice of leaving change behind as a pourboire for the staff.

Obviously in a cashless, card-paying society, changes had to be made.

There are some interesting details in the new legislation — for instance, it will be incumbent on outlets to display information to the public on how tips and gratuities are shared out or distributed among staff members. 

The very definition of what a “service charge” means is also addressed in the legislation, which also makes it illegal for tips and service charges to be used to make up part of an employee’s basic wages.

The legislation may not be perfect — there have already been warnings that employees may have to pay tax on those tips — but it is at least a formal recognition of the entitlements of those in the service industry.

Its introduction also poses a very obvious question: Why was it necessary in the first place to make it legally necessary for tips paid in electronic form to be disbursed to staff?