The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022
The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 will take effect on 1 December 2022. The Act give employees working in certain sectors a legal entitlement to receive tips and gratuities and introduces new rules about how employers share tips, gratuities and service charges amongst employees.
Until now there has never been legislation which obliges employers to pass on any tips received by them to their staff and the Act for the first time will regulate the payment of tips and gratuities by electronic means.
What are the Key Provisions of the Act:
- It provides clarity on the meaning of tips, gratuities and service charges
- It places tips and gratuities outside the scope of a person’s contractual wages. 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.
- Employers must clearly display their policy on how tips, gratuities and service charges are distributed.
- Employers must distribute fairly, equitably and in a transparent manner, tips that are received in electronic form, that is, through debit or credit cards or smart phones
- Employers must ensure any charge called a “service charge” or anything that would lead a customer to believe it is a charge for service, will have to be distributed to staff as if it were a tip or gratuity received by electronic means
- The employer must provide a statement to workers showing the amount of tips obtained in a period and the portion paid to the individual employee for that particular period.
- An employer cannot retain any share of electronic tips. However, there may be circumstances e.g., to pay tax, or bank charges arising from providing electronic modes of tipping, or only where the employer regularly performs to a substantial degree the same work performed by some or all the employees, where such an amount may be deducted that is fair in the circumstances.
- “Platform workers”, who are not direct employees, are included in the legislation.
Handling Cash Tips
While employers will be required to include detail on how cash tips are dealt with when displaying their policy towards tips and gratuities, there will be no other regulation of “cash tips” as it is usual that these tips are paid directly to the worker. However, cash tips are still taxable.
How cash tips are distributed will be required to be included in an employer’s publicly displayed policy on the management of tips and gratuities.
Inspections/Complaints
The electronic record generated by this payment method will support and facilitate inspections by the Workplace Relations Commission (WRC) in the event of a complaint being made.
Complaints may be referred to the WRC; where a complaint is upheld, and employee may be awarded compensation of up to four weeks’ pay.
Notes for Employers;
Employers who operate in sectors that are commonly associated with tips and gratuities (hospitality, tourism, hairdressing, taxi and delivery services, amongst others) will need to ensure to provide a statement to workers showing the amount of tips obtained.
Employers should not use tips and gratuities to “make up” contractual rates of pay and should ensure that minimum wage rates of pay are being complied with in light of this.
Employers should prepare their policy on how tips and gratuities are to be distributed and ensure to post it publicly from the 1st December.
