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The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022

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The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 (the “Act”) was signed into law by the President on the 20th of July 2022.

The main points

Under the Act;

  • Employers cannot use tips to make up an employee’s basic wage and are prohibited from deducting from an employee’s wage in respect of tips and gratuities made to an employee.
  • Employers are required to clearly display their policy on tips and service for customers clarifying how they are distributed (including those received electronically through debit or credit cards).
  • Employers cannot use the term ‘service charge’ or similar unless the gratuity goes directly to staff.

Clarity on the meaning of ‘service charge’

The Act also clarifies the difference between mandatory payments and service charges. The former being a payment that a “customer is required to pay in order to receive certain goods or services” while the latter is a payment “voluntarily made to, or left for, an employee” where the “customer intended or assumed that the payment would be kept by the employee”.

Where an employer performs the same work as staff

An employer may keep a share of tips given electronically where the employer can prove they perform, to a substantial degree, the same work performed by the employees who receive a share of electronic tips. Any share of tips kept by an employer should be no more than an amount that is fair and reasonable in the circumstances.

An employer will also be under the obligation to indicate clearly within 10 days of a distribution of tips, the total amount retained and the amount distributed to the employee specifically for that period.

Fines

Where an employer fails to adhere to specific obligations under the Act, they are liable under summary conviction to a class C fine of maximum €2,500.

With the introduction of the new Act and related consultations with employer and employee organisations imminent, employers need to ensure they have policies in place to aid compliance.