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Restaurants to be barred from using tips to subsidise employees' wages

Sinn Féin said the proposed legislation doesn’t go far enough to protect employees.

Image: Shutterstock

THE GOVERNMENT IS currently preparing draft legislation which would see restaurants and businesses barred from using tips to subsidise employees’ wages. 

The Cabinet will be asked to approve the writing of a new bill in the coming weeks.

Draft laws are currently being prepared on the issue by the Department of Employment and Social Protection, the government announced today, and will be presented to Cabinet for approval in the weeks to come. 

It is illegal for companies to use tips as part of an employee’s minimum wage but it is not illegal for them to use tips as part of a stated salary above that.

In a statement, released on the eve of a Private Members’ Bill on the same issue, Doherty said: “I am very open to exploring proposals for effective measures to ensure employees always receive the tips due to them.”

New proposals would see the Payment of Wages Act 1991 amended to add new obligations on employers in relation to tipping, including forcing restaurants and other businesses to publicly display their policies on how tips and service charges are distributed among staff.

In May, the government said it would only consider new legislation to regulate tipping if a “collective agreement” with employers didn’t work.

The proposed measures come following significant criticism of businesses which were not allowing staff to take home the full complement of tips they had received during a shift. 

Dublin restaurant The Ivy attracted criticism when it told staff last year that they would not be allowed to process payments from customers after the restaurant management alleged that some waiters were asking patrons to pay tips in cash, rather than on a credit card.

In April, the Irish Times reported that the Hard Rock Cafe in Dublin was among the Irish restaurants in which many of the service charges added to customers’ bills aren’t distributed among staff. 

“When a customer provides a tip after satisfactory service, they should know exactly where that money goes. Furthermore, tips should be a gratuity and should not be used to make up the agreed wage of an employee,” Doherty said.

The announcement comes as a Private Members’ Bill, brought by Sinn Feín’s Senator Paul Gavan, returns to the Seanad tomorrow. The Protection of Employee Tips Bill, if passed, would make it illegal for an employer to withhold, deduct or demand the return of a tip from an employee without a lawful excuse.

The government has said it will oppose the bill tomorrow. Speaking in the Dáil earlier today, Doherty said it would have “unintended consequences” for workers.

“The outcome of Sinn Féin’s Bill would be employers managing tips on behalf of their employees.  It would therefore result in all tips being taxed, which would in the first instance have a negative outcome for the income earnings of the people who work in that relatively low-paid industry,” she said. 

In 2018, the Low Pay Commission recommended against introducing legislation to regulate tips, warning that it could ultimately lead to lower wages for some employees. 

Speaking to TheJournal.ie, Sinn Féin’s spokesperson on workers’ rights Senator Paul Gavan called the new government proposals “hugely disappointing”.

“[Doherty] is tackling a side issue while ignoring the elephant in the room,” he said. “Will I support it? Absolutely. But it doesn’t solve the main issue.”

He called for the government to support the measures contained in the Sinn Féin bill.

The Restaurant Association of Ireland welcomed the government proposals.

In a statement, CEO of the Restaurant Association of Ireland, Adrian Cummins, said: “We welcome Minister Doherty’s proposal for an amendment to the Payment of Wages Act 1991. This will provide transparency for; staff, customers and owners, regarding tips.”

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