Are you up to date and compliant with the Payment of Wages (Tips and Gratuities) Act 2022? It’s time to brush up.
The legislation was enacted in December 2022 to standardise tipping practices across Ireland, and ensure no funny business was happening with tips. While the legislation is now two years old, this doesn’t mean you can forget all about it – businesses across the country are still paying fines and facing legal action for illegally handling tips and gratuities.
Let’s break it down:
What are the Key Points?
Tips and Gratuities Notice
All businesses that accept tips and gratuities must have a written policy detailing how tips handled. This should include:
- How your business collects tips and gratuities (e.g cash-only, card, both)
- How tips are distributed to staff (is it based on hours worked? A different method?)
- Do you use an external tipping platform such as JustTip?
- How mandatory charges (such as service charges) are dealt with (as above).
Not only must this written policy be readily available and agreed upon by staff, it must be clearly displayed for customers in your business so that they know where their tips are going.
Service Charges
Under the legislation, service charges should be treated in the same manner as tips and distributed among employees of the business. Their treatment should be outlined in the business’s tipping policy along with tips and gratuities.
If any other mandatory charge is taken by the business and not distributed to staff for whatever reason, the act also requires businesses to clearly display their policy on how mandatory charges, including services charges, are distributed, and if so, the manner in which they are distributed and the amounts so distributed.
Tips cannot be used to make up wages
Under the act, tips cannot be used to make up an employees contractual wage. The workers must receive the tips on top of the contractual rate of pay they already earn.
It is also important to note, employers cannot retain any share of tips or gratuities and service charges received, unless such retention is
- required by law (e.g., deductions for income tax, PRSI, USC etc), or
- to cover the direct costs of distribution (e.g., bank charges, credit card percentage, etc.) or,
- where the employer regularly performs the same kind of work as the employees, such an amount that is fair having regard to the amount of work performed by the employer.
Written Statements
Transaction reports and written statements must be provided to employees no later than 10 days from when the tips were distributed. This statement must include the total amount of tips/gratuities collected by the business for this period, and the amount distributed to the employee. Note: employees are not entitled to know the amounts other team members have received in tips and gratuities.
Fines for Non-compliance
There are class C fines of up to €2,500 in place for businesses found in breach of tipping legislation. Don’t get caught red-handed- if your business is not up to scratch with the Tips and Gratuities Act, the time to take action is now. Contact our team to learn how we can help.
