Using employee tips to subsidise wages set to be prohibited



Practice of using tips to subsidise wages to be banned

A new law affecting the hospitality sector moved closer this month. The government looks set to bring forward new legislation that will regulate the treatment of tips and gratuities.

Minister for Employment Affairs and Social Protection, Regina Doherty announced that she will introduce new measures which will prohibit employers from using tips and gratuities to make up contractual wages.

The new measures are designed to ensure fairness for workers and greater transparency for customers.

Recent media scrutiny

Recent media scrutiny into the variety of tipping practices being used by employers across the hospitality sector has likely triggered the government’s decision to act in this area.

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 has 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.

Will your business affected by these changes?

Employers in the hospitality sector will need to watch these developments closely.

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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