Taoiseach Leo Varadkar has insisted the Government cannot support a Sinn Féin Bill to stop employers using tips or service charges to make up contracted wages, even though a majority of the Dáil is expected to support it.
Mr Varadkar said the National Minimum Wage (Production of Employee) Tips Bill was counterproductive, changed the nature of tips and would result in them having to go through payroll and become subject to tax and social insurance.
Echoing comments by Minister for Employment Affairs Regina Doherty when the legislation was debated and passed by the Seanad against Government wishes, the Taoiseach told the Dáil the Government would amend existing law to ban employers using tips to make up wages and to oblige employers to state clearly in their premises what happens to the service charge.
But rejecting his claim as a "red herring" Independent TD Joan Collins said the current position is that if a tip is accepted, tax is supposed to be paid to the Revenue Commissioners and the Bill did not change that.
Mr Varadkar said he was glad Ms Collins had admitted in the Dáil that tips should be taxed because that would be the effect of the Bill.
“It would put tips through payroll and staff would have to pay tax on them and they may have it counted it against them when it comes to applying for a medical card, the working family payment or social housing.”
He said that at present, in the vast majority of pubs and restaurants the tips are managed by the staff. The Bill would require the employer to manage the tips, he said.
Earlier, at a gathering of politicians and union officials in Dublin on Tuesday to support the Bill from Sinn Féin Senator Paul Gavan, trade union official Brendan Ogle said some restaurants “had been relying on a legal loophole to use workers’ tips to pay wages” and he called for that loophole to be closed.
He welcomed the Minister for Social Protection Regina Doherty’s promise to introduced legislation and called on the Government to put “partisan differences to one side” and support the Sinn Féin Bill which would prevent restaurants from pocketing the tips earned by waiting staff.