Since 1 December 2022, Irish hospitality employers have been legally required to distribute electronic tips, gratuities and service charges to staff fairly, equitably and transparently, and are banned from using any tips to make up an employee’s basic wage. These duties come from the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022, which also requires employers to display a public notice explaining their tips policy. This guide sets out exactly what the Act requires and how it’s enforced.
What does Irish law require hospitality employers to do with tips?
The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 amends the Payment of Wages Act 1991 to place four core obligations on covered employers: distribute electronic tips, gratuities and service charges to employees in a fair, equitable and transparent manner; never use tips or gratuities to make up an employee’s basic or contractual wage; maintain a written policy setting out how tips are dealt with; and display that policy publicly so both staff and customers can see it. The Act also amends the Terms of Employment (Information) Act 1994 and the Workplace Relations Act 2015 to build tips into an employee’s core terms of employment and into the Workplace Relations Commission’s complaint system.
When did the Tips and Gratuities Act come into force in Ireland?
The Act was signed into law on 20 July 2022. The substantive obligations on employers (the duty to distribute electronic tips fairly and to display a tips and gratuities notice) took effect on 1 December 2022, under the Payment of Wages Act 1991 (Application of Sections 4B to 4F) Regulations 2022 and the Payment of Wages Act 1991 (Display of Notices) Regulations 2022.
Can employers use tips to make up an employee’s wages?
No. The Act places tips and gratuities outside the scope of an employee’s contractual wages. Employers cannot count tips towards the National Minimum Wage, a contractual salary, or any other basic pay entitlement, and cannot make deductions from tips in the way they might from ordinary wages. Tips must be paid on top of, not instead of, an employee’s agreed pay.
Do employers have to share out cash tips?
Not as a strict legal requirement in the way electronic tips are covered. The Act’s distribution duty applies specifically to tips paid by electronic means, such as debit card, credit card or smartphone, because the employer is in control of collecting and passing on that money, and the electronic payment record supports Workplace Relations Commission inspections. Cash tips handed directly to a worker are generally outside the employer’s control and are not traceable in the same way, so there is no statutory obligation to distribute them. However, an employer must still explain in its publicly displayed policy how cash tips are dealt with at that business.
Are service charges treated the same as tips?
Yes. Under the Act, any charge labelled a “service charge,” or any charge that would lead a customer to reasonably believe it is a payment for service, must be distributed to staff in exactly the same way as an electronic tip or gratuity. Employers cannot retain a service charge as general business income.
What must go in an employer’s tips and gratuities policy?
The written policy must set out how the business deals with tips, gratuities and service charges, including how cash and electronic tips are distributed among staff. Employers covered by the Act must also provide employees with this information as part of their statement of core terms of employment, which must generally be given within five days of the employee starting work, under the Terms of Employment (Information) Act 1994 as amended by the Act.
Where must the tips and gratuities notice be displayed?
Under the Payment of Wages Act (Amendment) (Tips and Gratuities) 2022, a covered employer must display a tips and gratuities notice at each premises, or part of a premises, where it provides the relevant service, and where the service is offered through a website or app, on that online digital platform too. Certain other persons involved in arranging the relevant service, such as those operating a digital platform, must display a comparable “Contract Workers Tips and Gratuities Notice.”
How is a “fair” distribution of tips decided?
If a Workplace Relations Commission adjudication officer has to decide whether a distribution of tips or gratuities was fair, the Act requires them to consider all relevant factors, including: the seniority or experience of the employee; the value of sales, income or revenue the employee generated for the business; the proportion or number of hours the employee worked during the relevant pay period; whether the employee is full-time or part-time; the employee’s role and influence in providing service to customers; and whether the employee was consulted about how tips would be distributed.
What can employees do if they think their tips aren’t handled properly?
Employees with more than one month’s service can bring a complaint to the Workplace Relations Commission. Grounds for complaint include: not being given the tips and gratuities policy; the policy or distribution not being fair; unlawful deductions from tips or gratuities; unlawful retention of tips or gratuities; and failure to display the required tips and gratuities notice. The WRC also has inspection powers and can examine an employer’s tips policy and customer notice directly, without waiting for a formal complaint.
What compensation can the WRC award?
Where an employee’s complaint succeeds, the Workplace Relations Commission can award compensation of up to a maximum of four weeks’ remuneration. The WRC’s stated approach is to seek voluntary compliance from employers where possible, rather than pursuing legal proceedings as a first step.
FAQ
Is tipping mandatory for customers in Ireland?
No. Irish law does not require a customer to leave a tip. The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 regulates what employers must do with tips once a customer chooses to leave one, not whether customers have to tip at all.
Do restaurants in Ireland have to give tips to staff?
Yes, for tips paid electronically. Since 1 December 2022, employers must distribute card, app and other electronic tips, gratuities and service charges to staff fairly, equitably and transparently. There is no equivalent statutory duty to distribute cash tips, since these are usually handed directly to the worker outside the employer’s control.
Can my employer keep part of the credit card tips?
No. Employers cannot make deductions from electronic tips or gratuities, and cannot use them to make up an employee’s basic or contractual wage. Tips must be distributed in addition to wages, not as part of them.
Is a service charge the same as a tip in Ireland?
Legally, yes, if it could lead a customer to believe it is a charge for service. Under the Act, any charge described as a “service charge,” or anything that would give a customer that impression, must be distributed to staff in the same way as an electronic tip or gratuity.
What happens if an employer doesn’t display a tips and gratuities notice?
Failing to display the required tips and gratuities notice is itself a ground for a complaint to the Workplace Relations Commission. The WRC also has powers of inspection and can review an employer’s tips policy and customer notice directly.
How much compensation can the WRC award for tips-related breaches?
Where a complaint succeeds, the Workplace Relations Commission can award compensation of up to a maximum of four weeks’ remuneration.
