Under Section 4E of the Payment of Wages Act 1991 (as inserted by the 2022 Tips and Gratuities Act), every covered employer must display a “tips and gratuities notice” stating whether tips are shared among staff, how they’re distributed if so, and whether any mandatory service charges are passed on too. The notice has been a legal requirement since 1 December 2022, and failing to display one is a criminal offence. Here’s exactly what the notice needs to cover, who has to display one, and what happens if a business doesn’t.
What the law requires the notice to say
Section 4E sets out specific pieces of information the notice must include:
- Whether tips or gratuities are shared among staff at all: The notice has to state plainly whether tips are distributed to employees, or not.
- How they’re distributed, if they are: This means explaining the method used for distribution. For example, whether tips go directly to the individual worker who earned them, whether they’re pooled and split at the end of a shift or pay period, and the amounts involved.
- Whether service charges are shared out too: The notice must separately confirm whether any mandatory charge (or a portion of it) is distributed to staff, and if so, how and how much.
WRC guidance on the Act suggests employers go further than the bare legal minimum and set out, for both cash and electronic tips, what proportion goes directly to staff and the mechanics of how it’s shared, such as direct payment, end-of-period pooling, or another method.
Cash tips need to be addressed too
Even though cash tips aren’t subject to the same statutory distribution rules as electronic ones, the notice still needs to explain how cash tips are generally handled in the business.
Where and how prominently it must be displayed
The Act requires employers to display their policy prominently. This means somewhere staff and customers would reasonably see it, not buried somewhere. The accompanying Display of Notices Regulations go further than a general “prominence” requirement: they tie the display obligation to where the relevant service is actually provided. For example, at the premises (or the part of the premises) where the service is delivered. This can require more than one copy where a business operates across multiple locations or service areas. Businesses should check the regulations directly for their specific setup rather than relying on a general prominence standard.
It also needs to appear in new starters’ core terms
Separately from the physical notice, the distribution policy must be given to every new employee in writing as part of their “day 5” core terms of employment (under the Terms of Employment (Information) Act 1994, as amended), within five days of starting the job. This is a distinctly different obligation from the display requirement, the notice covers what’s shown on the premises; the core terms document is what’s given directly to the individual worker.
What happens if a business doesn’t display one
Failing to display a compliant tips and gratuities notice is a specific criminal offence under Section 4E. An employer who doesn’t comply is liable, on summary conviction, to a Class C fine, which is currently up to €2,500. The Workplace Relations Commission (WRC) can inspect premises to check compliance, and electronic tip records (card and app payments) make it easier for inspectors to verify whether the displayed policy matches what’s actually happening.
