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'When you or I sit down in a restaurant, we need to know our tips are going directly to staff'

When a customer provides a tip after satisfactory service, they should know exactly where that money goes, writes Minister Regina Doherty.

Regina Doherty

WE’VE ALL DONE it. 

After an enjoyable meal with good service, you naturally pay your bill but you also want to give a little extra. So, you leave a few more Euros on the side to simply say thank you to the staff that have made your night that little bit more enjoyable.

That tip or gratuity is the human element of the transaction – the happiness of the customer rewarding the friendliness and professionalism of the establishment’s employee.

I thought it seemed straightforward and up to a while back had assumed that this transaction was as simple as that.

Holding tips back

Then I met and sat down with front line workers, particularly waiters and waitresses in the restaurant sector. Unfortunately, in some establishments it appears that tips are actually being held back, not being distributed to employees and, in some cases, subsidising the employer.

I know that this practice isn’t widespread but I have heard enough stories first-hand from young professionals in the hospitality industry to know it is happening in some places.

This is not on.

When you or I sit down in a restaurant or hotel or any similar establishment, we need to know where our tips go and we need to be reassured that they are going directly to staff.

So how do we do that?

Well, last year I tasked the Low Pay Commission – a body which has representation from a wide range of stakeholders including workers representatives – to investigate the possibility of regulating tips.

The Commission unanimously and strongly recommended against introducing heavy regulation or primary legislation in this area.

Some politicians in opposition parties have indeed proposed legislation to tackle the issue. I appreciate and share their desire to do something but the Low Pay Commission has warned that this type of legislation is a blunt instrument and could have unintended negative consequences for low paid workers including a potential reduction in their take-home pay.

However, I am determined to ensure greater fairness and transparency when it comes to workers tips and, thankfully, there are other ways to address this issue – ways which will work.

One of the issues highlighted anecdotally in recent months has been the cases where some restaurants have been using tips and gratuities to make up a portion of the wages staff have been contracted on.

Tips, as we all assume when we leave them on the plate, are an ‘extra’ for staff to reward good personal and professional service. They are not considered by customers as a subsidy to employers to assist them to pay wages.

Payment of Wages Act 

I am not happy that such practices exist and that is why I am introducing an amendment to the Payment of Wages Act so that tips cannot be used to make-up or satisfy payment of contractual rates of pay. This will close off once and for all a behaviour that, while not widespread, does exist and which I believe unfairly gives the whole hospitality industry a bad name.

Legislation is currently being drafted by officials in my Department and the approach being taken will provide further protections for low-paid workers, without falling foul of the risks and adverse consequences for workers set out in the recent Low Pay Commission Report.

I expect to publish this draft legislation in the coming weeks and I would hope all parties who truly care about this issue will support it.

The recent media coverage of this issue has prompted many of us to question exactly where our tips go. For that reason, I think we also need greater transparency.

Therefore, I will also be providing for a requirement on employers to clearly display their policy on how tips, gratuities and service charges are distributed in their premises.

When you walk into a restaurant or hotel in future, you will know where your tips are going.

To be fair, having met with representatives of restaurants, hotels and pubs amongst others, they are happy to work with us on this. Everyone – customers, staff and employers will benefit from improved and very public clarity on how tips are distributed.

Despite the complexity involved in dealing with an issue such as this, it is possible to develop effective measures to ensure employees always receive the tips due to them.

When a customer provides a tip after satisfactory service, they should know exactly where that money goes. And, ultimately, it should go to the employee.

Regina Doherty is the Minister for Employment Affairs & Social Protection and a TD for Meath East. 

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