New Tips Law from December

The Government has announced that a new law designed to protect tips received by workers will come into effect on 1 December.

The Payment of Wages Act gives employees a legal entitlement to receive tips and gratuities paid in electronic form and requires that this money should be paid to workers in a manner that is fair.

Any charge called a "service charge" or anything that would lead a customer to believe it is a charge for service will have to be distributed to staff as if it were a tip or gratuity received by electronic means. The distribution of tips can take into account factors such as the seniority or experience of an employee, the value of sales generated by them or the number of hours worked.

Employers will be required to display information on how tips, gratuities and mandatory charges are shared or distributed among staff. Failure to comply with the display obligations could lead to a fine.

There will be a four-week period to 1 December to provide employers with a lead-in time to prepare for the changes required by the new law.

The main sectors to which the measures will apply are tourism, hospitality, hairdressing, taxi, and delivery services, but there may be additions to the list in the future if new areas where tipping is prevalent emerge in the economy.

T├ínaiste and Minister for Enterprise Trade and Employment Leo Varadkar said, "Tips can form a significant percentage of a worker's take-home pay, and these changes go a long way to ensuring those tips are distributed to the people who have earned them."

He added, "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."

The new law requires the Minister for Enterprise, Trade and Employment to review the legislation after it has been in effect for one year, allowing the Government to assess the effectiveness of the measures and to decide whether any further steps are necessary.