Auto-enrolment is coming to Ireland, and for many hospitality businesses there are two hidden risk that most employers haven’t spotted yet.
What does this mean?
Ireland’s auto-enrolment system applies to anyone aged 23–60 earning €20,000 or more per year.
For these employees receiving tips through payroll increases the total pensionable pay on which their contributions are calculated. According to Department of Social Protection guidance, any income recorded in the payroll “gross pay” field is included in this calculation, including tips, service charges and bonuses! (Department of Social Protection, Auto-Enrolment Overview, 2024).
Under Ireland’s auto-enrolment model, employees and employers must contribute 1.5% of pensionable earnings in 2025, rising to 6% over ten years. To break this down, if a server earning €35,000 in base pay receives €3,000 per year in card tips processed through payroll, their pensionable earnings jump to €38,000. (Department of Social Protection, Auto‑enrolment retirement savings system for employees (My Future Fund), gov.ie )
This means both the employer and employee’s annual pension contribution is calculated on the entire €39,000 rather than their base wage alone. For many workers already living pay check to pay check, this reduces their take-home pay even further despite the fact that tips were never intended to function as pensionable salary. For employers, it also adds to the long list of growing hospitality costs!
The effect on your business
For hospitality employers, the cost impact can be substantial. Employers are required to match employee contributions, so if an employee’s income is increased by tips, the employer’s contributions rise accordingly. This cost applies to all staff earning above the threshold who receive tips, increasing overall payroll expenses.
If tips inflate gross pay, the employer must contribute a pension percentage on every euro pushed into payroll even though tips are not part of their core labour cost. This can create thousands in unexpected annual pension liabilities for businesses already operating on tight margins.
By keeping tips out of payroll entirely, JustTip ensure that employers only pay pension contributions on genuine wage costs, not on discretionary customer gratuities.
Employees earning under the threshold may not be safe:
If tips flow through payroll, they increase recorded gross pay. If that pushes an employee over €20,000, the employer must automatically enrol them into the new pension scheme. This happens even if the employee’s core wage is below €20,000. (Department of Social Protection, Auto-Enrolment Overview, 2024).
How JustPOS Helps Prevent Accidental Auto-Enrolment
JustPOS is the only solution that splits tips at the point of payment, ensuring that they never touch your business bank account. Tips are securely processed through our JustTip platform, allocated directly to employees, and fully recorded for compliance with legislation while your business receives the full bill straight into its bank account.
This removes the PRSI, VAT, and auto-enrolment liabilities.
Liabilities on tips from the employer
Our model is designed to keep tip flows separate from employer payroll, reducing the risk that tips push employees over the threshold.
What JustTip Does:
- Routes card tips directly to staff through our complaint tip distribution platform, without entering your payroll gross-pay field.
- Provides full transparency, reporting and automation.
- Removes employer involvement in tip handling (supporting compliance with the Payment of Wages Act).
For more information about how tips may affect your autoenrollment and pension schemes going forward, contact us here.
