Skip to main content

Legislation

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 came into effect on 1 December 2022. The Act, introduced new rules about how employers share tips, gratuities and service charges amongst employees.

Summary of what you need to know

  • Employers cannot use tips and gratuities to ‘make up’ contractual rates of pay and cannot make a deduction from a person’s wage in relation to tips and gratuities
  • Electronic tips must be distributed fairly and transparently
  • You must display your tipping policy for customers
  • You must have end to end transaction reports for all electronic tips/gratuities
  • These reports must be available for employees within 10 days of the gratuity being processed
  • The WRC can check your tipping practises are inline with legislation at any time

Solutions for these new rules do exist, contactless tipping platforms exist which were built to combat these issues for businesses, an example would be JustTip.

Indepth New Rules of the Legislation

Policy on how tips or gratuities will be distributed Employers cannot use tips and gratuities to ‘make up’ contractual rates of pay and cannot make a deduction from a person’s wage in relation to tips and gratuities. All employees must be consulted on the policy introduced on how tips or gratuities will be distributed. Employers must also consult with employees before making a material change to the policy.

Distribution of card or smart phone tips

Electronic tips received by the employer must be distributed fairly and in a transparent way.

Electronic tips include tips paid by:

  • Debit or credit card
  • Smart card
  • Cashless or contactless tipping apps or platforms
  • ‘Push notification’ apps

Employers can consider certain factors when deciding how to distribute tips, including:

  • Seniority or experience
  • The value of sales or revenue generated
  • The number of hours worked
  • Whether the worker is on a full-time or part-time contract
  • The worker’s role in service delivery

The WRC can order an employer to reimburse any unlawful tip or gratuity deductions.

Your employer must give you a statement of the tips and gratuities distributed, including the total amount of electronic tips received during a particular period and how much was paid to you. You must get this statement within 10 days of the tips and gratuities being distributed.

Obligation to display a tips and gratuities notice

Customers have the right to know what service charges are used for and who they go to. Since 1 December 2022, employers must clearly display their policy on how cash and card tips, gratuities and service charges are distributed.

The tips and gratuities notice must clearly state:

  • Whether or not tips or gratuities are distributed to and among staff
  • The way they are distributed and the amounts distributed
  • Whether or not service charges (or any portion of them) are distributed and if so, how they are distributed and the amounts distributed

How the rules are enforced

  • All electronic tips received by the employer must be distributed fairly and in a transparent way.
  • This will be inspected through the Workplace Relations Commission (WRC).
  • The WRC can order an employer to reimburse any unlawful tip or gratuity deductions.