New Law Protects Employees’ Tips & Service Charges
Michelle McDonagh, Consulting and Client Relationship Manager, Adare Human Resource Management
The Payment of Wages (Amendment)(Tips and Gratuities) Act 2022, which was signed into law on the 20th July 2022, is set to be introduced on 1st December 2022. The Government brought forward this legislation to strengthen the rights of Employees, prohibiting the use of tips and gratuities to make up contractual rates of pay. Therefore, from the 1st of December, it will be illegal for employers to use tips and gratuities to form part of the basic wages.
The new legislation will see employees given legal rights over how tips are distributed. It will be reviewed after one year to assess its effectiveness and decide if further measures are needed.
Under the Act, Employers are required to:
- Provide clarity on the meaning of tips, gratuities and mandatory service charges – all now fall under “service charge”
- Prominently display their policy on how both card and cash tips are distributed
- Ensure tips and gratuities – but not mandatory service charges – are placed outside the scope of an employee’s contractual wages
- Ensure all electronic tips are distributed fairly and in a transparent way
Organisations will also be required to keep a record of how tips and gratuities are distributed in the event of a complaint. Employers must provide a statement to workers within 10 days of the distribution of tips showing the value of tips the organisation has earned in a given period of time and how much of that was paid to the individual employee for that particular period. The records must be available for inspection by the Workplace Relations Commission.
Notice use of the word ‘workers’
instead of ‘employees’
above, as this legislation will also apply to what is now known as “platform workers”, who are independent contractors using an online platform to access organisations or individuals to provide a service.
Follow this link to download
a template for Contracts of Employment Checklist and WRC Checklist to Prepare for Inspection
Employers must now include the policy regarding the distribution of tips or gratuities and service charges in the employee’s core terms and conditions of employment which must be provided to new employees within 5 days of commencing employment.
Employees can make a complaint to the Workplace Relations Commission under this Act, provided they have at least one month’s continuous service with the relevant employer. If their case is upheld, they may be awarded compensation not exceeding four weeks’ remuneration.
Ensuring your employment contracts, policies and procedures are being updated is essential to ensuring you are always ‘audit ready’ in case the Workplace Relations Commission (WRC) come to your premises to complete an inspection.
Adare Human Resource Management is a team of expert-led Employment Law, Industrial Relations and best practice Human Resource Management consultants. For more information go to www.adarehrm.ie or call (01) 561 3594 or email email@example.com.