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The Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, has today announced that the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 will come into effect on 1 December.
There will be a 4-week period between now and 1 December to provide employers with a lead-in time to prepare for the changes required by the new law which have been well-signalled in advance.
Welcoming the commencement of the Act, the Tánaiste 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. This new law is a positive step towards improving the rights and entitlements of lower-paid workers as well as providing transparency for customers. 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 gives employees a legal entitlement to receive tips and gratuities paid in electronic form and requires that these tips and gratuities should be paid to workers in a manner that is fair in the circumstances. 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.
A fair distribution of tips will be context-specific, taking into account such matters as the seniority or experience of an employee, the value of sales generated by them, the number of hours worked, and so on.
The Act requires the Minister for Enterprise, Trade and Employment to review the legislation after it has been in effect for one year. This will allow the Minister to assess the effectiveness of the measures and assess whether any further measures are necessary.
This new law adds to other workers’ rights that the government is introducing, which include Statutory Sick Pay, a new Public Holiday in February, the forthcoming Right to Request Remote Work and the move to a National Living Wage.
The Tánaiste has now signed into law the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 Commencement Order 2022. He has also signed Regulations to give effect to the Act’s provisions which will come into effect from 1 December.
The Payment of Wages (Application of Sections 4B to 4F) Regulations 2022 prescribe the service areas in the economy to whom the Act will apply. The main sectors to which the Act will apply are tourism, hospitality, hairdressing, taxi, and delivery services. These sectors attract a significant percentage of young people, students, females, and migrant workers for whom English is very often not a first language. There may be additions to this list in the future if new areas where tipping is prevalent emerge in the economy over time.
The Payment of Wages (Display Notice) Regulations 2022 provide for the display of a tips and gratuities notice. Every employer will be required to display information on the manner in which tips or gratuities and mandatory charges are shared or distributed to employees. The information to be displayed must state:
An employer who contravenes these display obligations shall be guilty of an offence and shall be liable on summary conviction to a Class C fine.