Workers to have legal right to tips paid by credit or debit cards, says Minister

Regina Doherty to expand scope of planned legislation governing payment of wages

Workers will in future have a legal right to receive “on a fair, transparent and equitable basis” tips and gratuities paid electronically by customers using debit and credit cards, the Minister for Employment Affairs and Social Protection, Regina Doherty has said.

She said she had received Government approval to expand the scope of the planned updated legislation governing the payment of wages.

Last July the Minister said that under the new legislation she intended to amend the existing Payment of Wages Act to ensure that tips and gratuities could not be used to “make up” or satisfy a person’s contractual wages.

She said the legislation would provide “for a requirement on employers to clearly display, for the benefit of workers and customers, their policy on how tips, gratuities and service charges are distributed”.

Ms Doherty said on Monday that under the new legislation she now also intended:

* to provide a legal entitlement for workers to receive tips and gratuities that are paid by customers in electronic form (ie debit or credit cards);

* to oblige employers to distribute electronically gifted tips to workers in their establishments in a “fair, transparent and equitable manner”.

Government had given her approval to progress the new legislation as quickly as possible, and to continue to oppose the progression of a separate private member’s bill on the same topic in the Oireachtas, she said. The Government believed that this private member’s bill was “fundamentally flawed and will not achieve any real advantage for workers,” she added.

“Since July, my officials have engaged with a number of stakeholders, including Siptu and the Irish Congress of Trade Union worker representatives who have been actively campaigning on this issue from an early date. Their suggestions and recommendations have fed into the amendments we have now made to the original scheme. I want to go as far as I can in securing for low-paid workers a legal entitlement to their hard-earned tips.

“The advice I have received from the Low Pay Commission and other informed stakeholders is that I cannot design a legal regulatory framework around cash tips as they’re not, by their very nature, controlled or accounted for at a central point. However, I hope we can create a new piece of legislation that gives employees an entitlement to tips paid in electronic form. I want those tips and gratuities to be shared with the workers in a fair and transparent manner. What is ‘fair’ in one establishment may not be ‘fair’ in another, so I want to leave it up to the staff and employers themselves to work out together the best way to share those tips. I understand this to be the preference of most workers.

“I am also making it obligatory for employers to be transparent, to staff and customers alike, about how tips, gratuities and service charges are shared and utilised in their businesses. I am certain that my Bill is a step in the right direction for low-paid workers and that it builds on the progress I have already made with the Employment (Miscellaneous Provisions) Act 2018 where I curbed zero hours contracts and provided a right for workers to banded hours contracts.”

In February the Low Pay Commission advised the Government that new legislation or regulations to ensure that workers receive tips or gratuities paid by customers were not needed.

The commission said it did not believe that sufficient reliable data existed to prove that the issue of employers withholding employee tips was a significant problem in Ireland.

The commission said it did not believe that legislation or regulation should be introduced in this area, as the administrative and compliance costs involved would not be justified.

“The commission is also concerned that there could be unintended negative consequences such as the reclassification of service charges, leading to a potential reduction in the take-home pay of low-paid employees,” it said.

Government sources subsequently said that the commission had advised against introducing “heavy regulation or primary legislation on the issue”.