Minister for Employment Affairs and Social Protection, Regina Doherty TD, announced this month that she has received government approval to proceed with draft legislation that will regulate employer practices around tips and gratuities.
Minister Doherty is responding to recent reports suggesting that a minority of employers have been using tips to satisfy employee’s contractual rates of pay.
While employers are not permitted to include tips in “gross pay” for national minimum wage calculations, there is no law prohibiting employers from including tips in the satisfaction of contractual rates of pay.
Using tips to pay wages prohibited
The government has approved the Minister’s proposal to make a change to the Payment of Wages Act which will make it illegal for employers to use tips to make-up or satisfy payment of contractual rates of pay.
Requirement to display tips policy
The proposed amendments will also require employers to clearly display, for the benefit of workers and customers, their policy on how tips, gratuities and service charges are distributed.
Existing Sinn Féin proposals
Sinn Féin previously proposed the National Minimum Wage (Protection of Employee Tips) Bill 2017 which if enacted would provide employees with a legal right to keep their tips.
Although the Sinn Féin legislation recently passed all stages in the Seanad, it looks likely to be blocked by the government in the Dáil.
New measures to protect low paid workers
In her announcement, Minister Doherty referred to the enactment of the Employment (Miscellaneous Provisions) Act in March as further evidence of the government’s commitment to protecting low-paid workers.
The prohibition on the use of tips to satisfy contractual wages is designed to further bolster the employment rights of low paid and precarious workers.
Impact on hospitality sector
It remains unclear at this point what employers will need to do to demonstrate that they have complied with the new measures.
Now that the government has approved the draft Heads of Bill, the Minister’s department will draft the necessary legislation which is expected to commence pre-legislative scrutiny as soon as possible.
The hospitality sector will be closely monitoring the passage of the new law which should help clarify the legal obligations of hospitality sector employers and draw a line under recent media coverage into the treatment of tips.
Is your business affected by these changes?
If you have any questions in relation to national minimum wage or payment of wages, contact Peninsula’s expert employment law advisors on 0818 923 923.
