New laws governing the practice of tipping come into force from today, providing a boost to workers’ rights.
Under the Payment of Wages Act employees now have a legal entitlement to receive tips and gratuities paid in electronic form.
The new law also requires that this money should be paid to workers in a manner that is fair.
It will also make it illegal for tips, gratuities, and service charges to make up part of an employee’s basic wages.
The rules also require that 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.
However, the distribution of tips can take into account various factors.
These include the seniority or experience of an employee, the value of sales generated by them or the number of hours worked.
Under the regulations, employers will have to display information on how tips, gratuities and mandatory charges are shared or distributed among staff.
The main sectors to which the measures will apply are tourism, hospitality, hairdressing, taxi, and delivery services.
Others, however, may be added to the list in the future if new areas where tipping is prevalent emerge in the economy.
The Minister for Enterprise, Trade and Employment is required under the new law to review the legislation after it has been in effect for one year.
This will enable the Government to assess the effectiveness of the measures and to decide whether any further steps are necessary.
However, recruitment specialist, Excel Recruitment, is calling on the Government to boost the incomes of lower-paid earners in sectors such as beauty and hospitality by removing tips – or a certain amount of tips – from the tax net.
This it claims would encourage more workers back into hospitality and other low-paid sectors.
“All tips received by staff are currently taxable,” said Shane McLave of Excel Recruitment.
“However, given the often low-paid nature of the work – and the huge staff shortages which the hospitality sector is currently grappling with, more people could be encouraged to work in the sector if tips were not taxable – or if they could earn a certain portion of them tax-free.”