Legislation to ensure workers receive tips is not needed, says Low Pay Commission

New legislation or regulations to ensure that workers receive tips or gratuities paid by customers are not needed, the Low Pay Commission has advised the Government.

In a report published on Thursday the Commission said it did not believe that sufficient reliable data existed to prove that the issue of employers withholding employee tips was a significant problem in Ireland.

The Commission said it did not believe that legislation or regulation should be introduced in this area as the administrative and compliance costs involved would not be justified.

“The Commission is also concerned that there could be unintended negative consequences such as the reclassification of service charges, leading to a potential reduction in the take home pay of low paid employees. “

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The Commission, in its report which was published on Thursday, said while tips could not be used as a reckonable component for calculating the National Minimum Wage and were not considered wages under the Payment of Wages Act, the ownership of tips was not addressed anywhere in Irish legislation.

It said therefore there was “nothing to stop an employer from taking ownership of employee tips”.

However the Commission also maintained that legislation in this area “may not be enforceable”.

"The Workplace Relations Commission was clear that from both an adjudication and enforcement point of view, legislation in this area could be unworkable. While the intention of the Bill is undoubtedly honourable, the Commission does not feel that introducing legislation which cannot be applied and enforced effectively is a worthwhile endeavour."

The Minister for Employment Affairs and Social Protection Regina Doherty asked the Low Pay Commission to examine current practices regarding tips and gratuities including whether legislation might impact negatively in tax or financial terms, upon either employees or employers. This followed the introduction of a private member's Bill in this area by Sinn Féin in the Seanad in 2017.

The chairman of the Low Pay Commission Dr Donal de Buitléir said on Thursday that there was comparatively little official data available in Ireland in this area and the Commission had consulted relevant sectors and interest groups.

“Overall, we considered that there is insufficient reliable data to conclude that the issue of employers withholding tips is a significant problem in Ireland. Furthermore, we had concerns that any benefits would not be justified by the administrative and compliance costs, and quite significant concerns as to the enforceability of legislation with regard to matters which are not statutory rights, given the informal nature of tips and gratuities.”

Ms Doherty said the issues regarding tips and gratuities was “incredibly complex” and that there were no easy answers.

“I believe that this report should frame the debate on this issue going forward. I am reviewing all options for solutions in this area in the light of this report will has brought a firmer factual basis to the current debate.”

The Low Pay Commission report said that tipping in Ireland was primarily associated with the hospitality sector.

“However, evidence from submissions and international comparisons suggests that it may extend to a wide range of other professions including taxi drivers, hairdressers, tour guides, croupiers and delivery drivers. While tipping may be relatively widespread in a number of industries, there is nothing in Irish law which states that an employee is automatically entitled to keep their tips.”