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

2nd November 2022 | Acts, SIs

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 gives new rights to employees, prohibiting the use of tips and gratuities to ‘make up’ contractual rates of pay.

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 was enacted on 20 July 2022.

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 Commencement Order 2022 was signed on 27 October 2022.

The Payment of Wages (Application of Sections 4B to 4F) Regulations 2022 was signed on 28 October 2022, providing for the application of the Payment of Wages (Tips and Gratuities) Act 2022 to certain sectors with effect from 1 December 2022.

The Payment of Wages (Display Notice) Regulations 2022 was signed on 28 October 2022, providing for the application of the particulars of a tips and gratuities notice to certain sectors with effect from 1 December 2022.

The aim of the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 is to:

provide clarity on the meaning of tips, gratuities and service charges
place tips and gratuities outside the scope of a person’s contractual wages
oblige employers to display prominently their policy on the distribution of both cash and card tips
oblige employers to 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 
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
ensure that workers will be provided with a statement showing the amount of tips obtained and the portion paid to the individual worker in the period

An important element of the new law will be to give employees a legal entitlement to receive tips and gratuities paid in electronic form (that is, by debit or credit card or smart phone) with a provision that these tips and gratuities should be paid out to workers in a manner that is fair in the circumstances. A fair and equitable distribution will be context specific and is likely to take into account matters such as staff hours, value of sales income or revenue generated, a worker’s role in service delivery, whether the employee is on a full-time or part-time contract of employment and so on.

There will be new requirements on employers to clearly display their policy on how card and cash tips, gratuities and mandatory charges are treated.

Payment of tips and gratuities by electronic means, in contrast to cash tips that are paid directly to the worker, means that the employer is in control of how these tips and gratuities are distributed. 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. 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.

Until now, there has been no legislation which obliges employers to pass on any tips received by them to their staff. Therefore, a customer had no way of knowing if the tip they left was given to the intended recipient(s) and the worker had no protection if their employer chose to keep some or all the tips left by customers. While most employers treat their staff well, there are examples where some tips are simply included as part of overall business income or used to contribute to employees’ contractual base wages.

The Act requires the Minister for Enterprise, Trade and Employment to review the legislation after it has been in effect for one year. This will allow the Minister to assess the effectiveness of the measures and assess whether any further measures are necessary.

More information is available on the Workplace Relations Commission website, see Tips and Gratuities - Workplace Relations Commission.