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04 Jul 2022

A tip in the right direction: Draft law to give new rights to employees

A tip in the right direction: Draft law to give new rights to employees

Tánaiste Leo Varadkar has received Government approval to draft a law that will give new rights to employees, which prohibits the use of tips and gratuities to ‘make up’ contractual rates of pay. 

This will include new requirements for employers to clearly display their policy on how both card and cash tips, gratuities, and service charges are distributed. All electronic tips must be distributed fairly and in a transparent way.

Leo Varadker said this new law will give workers legal protections over tips and it will mean that any tips received cannot be counted towards an employee’s basic pay.

This means tips must be counted as additional and separate, according to the draft law.

"I know many people are sometimes unsure how or if tips and service charges are distributed when paying for a meal and once this law is enacted, all employers will be required to show clearly how tips and service charges are dealt with in a business." added the Tánaiste.

It is hoped this new law will provide clarity for both customers and staff.

The aim of the Payment of Wages (Amendment) (Tips and Gratuities) Bill is to: 

Provide clarity on the meaning of tips, gratuities, and service charges; Place tips and gratuities, but not service charges, outside the scope of a person’s contractual wages; 
Oblige employers to display prominently their policy on the distribution of both cash and card tips; 
Oblige employers to distribute fairly, equitably and in a transparent manner, tips that are received in electronic form i.e. through debit or credit cards or smartphones.

Employees will have a legal entitlement to receive tips paid in electronic form and will be paid out in a fair manner.

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