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07.08.2019

Government approves new rules on employee ‘tips’

 

Government approves new rules on employee ‘tips’

Minister for Employment Affairs and Social Protection, Regina Doherty TD, announced this month that the government has approved draft legislation that will regulate employer practices around tips and gratuities.

The Minister’s announcement came in response to reports suggesting that a minority of employers have been using tips to satisfy employee’s contractual rates of pay.

Current position

As it stands, the law prohibits employers from including tips in “gross pay” for national minimum wage calculations. Outside of national minimum wage rules, there is no law precluding employers from including tips in the satisfaction of contractual rates of pay.

Payment of Wages Act

The government proposes legislating the area by amending the Payment of Wages Act to specify that employers are prohibited from using tips to make-up or satisfy payment of contractual rates of pay.

Tips policy to be displayed

Under the government’s proposed new rules, employers will be required to clearly display their policy on how tips, gratuities and service charges are distributed in their premises. Any businesses which fail to prominently display their policy, will be subject to fines of up to €2,500.

Competing Sinn Féin proposals

Sinn Féin already proposed an earlier bill which if enacted would provide employees with a legal right to keep their tips.

Earlier this month, the Seanad passed the National Minimum Wage (Protection of Employee Tips) Bill 2017 in relation to the treatment of employee tips despite government opposition.

Minister Doherty confirmed during the most recent Seanad debate that the government will oppose the Sinn Féin proposals on the basis of guidance it received from the Low Pay Commission.

Low Pay Commission report

The Low Pay Commission issued a report to the government in 2018 that strongly advised against introducing heavy regulation or primary legislation on the treatment of tips.

The Commission warned that there could be unintended negative consequences for low paid workers leading to a potential reduction in their take-home pay.

The Workplace Relations Commission also warned that the regulation in the area could be unworkable from both an adjudication and enforcement point of view.

Hospitality sector to monitor developments

Until the amending legislation is passed, it is not clear what action employers will need to take to show that they are in compliance with the updated law.

Employers in the hospitality sector will need to keep up to date with these developments as their legal obligations in relation to how they treat tips will soon change.

Will your business be affected by these changes?

If you have any questions on this or any other HR issue, please contact the advice line on +353 1 886 0350 to speak with one of our experts.

 

 

 

 

 

 

 

 

 

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