A new law aimed at ensuring staff in restaurants and bars get paid their share of tips left by customers will come into effect on Thursday.
From December 1st, employers must display their tipping and service charge policy and staff will have a right to a share of tips paid electronically.
Tánaiste Leo Varadkar, also Minister for Enterprise, signed the order to bring in the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 at the end of October. From then, businesses had four weeks to implement the changes.
The new law gives employees a legal entitlement to receive tips and gratuities paid in electronic form and requires that the tips should be paid to workers in a manner that is fair in the circumstances.
The new law also means that any charge called a “service charge”, or anything that would lead a customer to believe that there is a charge for service, must now be distributed to the staff.
The fair distribution of tips will be context-specific, and can take into account the seniority or experience of an employee, the value of sales generated by them and the number of hours worked. Tips and gratuities cannot be used to contribute to an employee’s contractual wages.
The law applies to the tourism, hospitality, hairdressing, taxi and delivery services sectors.
Employers will be required to display information on the manner in which tips or gratuities and mandatory charges are shared or distributed to employees.
Those that fail to do this could be fined €2,500 upon summary conviction.
Restaurants Association of Ireland (RAI) chief executive Adrian Cummins said his organisation supports the new legislation which will “give greater clarification and transparency regarding distribution to staff”.
He suggested that one “unintended consequence” would be that staff will be taxed for tips paid electronically.
Mr Cummins said this could pose a challenge for the industry at a time when it is trying to maintain staff levels.
He also said the new law could result in some restaurants moving away from electronic tipping but said he wanted to see “how it pans out over the next few weeks and months”.
Mr Varadkar previously said that tips can form a significant percentage of a worker’s take-home pay and the changes in the new law “go a long way to ensuring those tips are distributed to the people who have earned them”.
He said it is “a positive step towards improving the rights and entitlements of lower-paid workers as well as providing transparency for customers”.
Mr Varadkar also said 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”.