On-trade

‘Service charges’ must go to staff – Varadkar

Employers who use 'service' charges to supplement staff wages are to be the subject of The Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022 Bill No 5 of 2022 which was published by the Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar on the 24th of January 2022 and comprises nine sections.

 

"Currently, there's no legislation which obliges employers to pass on any tips received by them to their staff. Therefore, a customer has no way of knowing if the tip they left was given to the intended recipient or recipients and the worker has no protection if their employer chooses to keep some or all the tips left by customers.”

“Currently, there’s no legislation which obliges employers to pass on any tips received by them to their staff. Therefore, a customer has no way of knowing if the tip they left was given to the intended recipient or recipients and the worker has no protection if their employer chooses to keep some or all the tips left by customers.”

The new Bill went before the Seanad in late June.

Its purpose is to provide clarity on the meaning of tips, gratuities and mandatory service charges.

It aims to place tips and gratuities outside the scope of a person’s contractual wages and it obliges employers to display prominently their policy on the distribution of tips.

It also obliges them to distribute tips received electronically via debit and credit cards.

In effect the proposed legislation will prohibit ‘service’ charges on a bill unless the entirety of that service charge goes directly to the staff.

“Customers really can’t be sure what service charges are used for or whom they go to,” explained the Tanáiste Leo Varadkar, “Voluntary service charges are clearly the same as a tip or a gratuity but by definition mandatory service charges are not. As things stand, you’re expected to pay, without any information on where the money goes.

“I’m happy we’ve been able to come up with a solution now which will effectively ban employers from using the term ‘service charge’ or any similar term unless the money goes straight to staff. Employers must be explicit about any additional charge and where it goes once this new law comes into force.”

There had been “anecdotal evidence that a minority of employers, particularly in the restaurant and hospitality sectors, use tips or gratuities – given by customers and intended for staff – as a means of meeting their payroll obligations and other overheads,” said the Tánaiste when speaking about the Bill previously, “Currently, there’s no legislation which obliges employers to pass on any tips received by them to their staff. Therefore, a customer has no way of knowing if the tip they left was given to the intended recipient or recipients and the worker has no protection if their employer chooses to keep some or all the tips left by customers.”

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