CABINET HAS TODAY approved the publication of a new law that will give customers clear information on where their tips and service charges go and prohibit the use of tips to ‘make up’ contractual rates of pay.

The Payment of Wages (Amendment) Bill, brought forward by Tánaiste Leo Varadkar will provide clarity to workers on the meaning of tips, gratuities and service charges. 

The new legislation will also place tips and gratuities, but not service charges, outside the scope of a person’s contractual wages, and will oblige employers to display prominently their policy on the distribution of both cash and card tips.

Employers will also be obliged to distribute fairly, equitably and in a transparent manner how tips that are received in electronic form – such as through debit, credit cards or smart phones.

This will be inspected through the Workplace Relations Commission (WRC). 

The distribution obligations will not affect businesses where tips are managed by employees themselves, it is believed. 

The Tanaiste admitted last year that plans to address the issue had been interrupted by both the calling of a general election in early 2020 and the onset of the Covid-19 pandemic.

While he did not think it is widespread, Varadkar said at the time that there was some evidence that tipping was being abused by some employers.

While he said this is “small piece of legislation” it is an”important one”, he added.

Redundancy payments

Separately today, the Tánaiste also received Cabinet approval to publish the Redundancy Payments (Amendment) Bill.

This Bill gives employees who have lost out on reckonable service while they were on lay-off due to Covid-19 restrictions, and have subsequently been made redundant, a special payment of up to €1,860 to bridge the gap in their redundancy entitlements.

The calculation for the payment is based on existing statutory redundancy provisions. The maximum to which any employee will be entitled is €1,860 if they earned in €600 or more a week and were laid off for the full emergency period.

The Department of Social Protection is working on the necessary administrative systems to provide for the application and payment processes. It is expected payments will become operational in the first half of this year.

A worker does not have to have been in receipt of any form of State payment, such as the PUP or jobseekers, during the lay-off period, although they could have been.

The criteria are simply that the person qualifies for redundancy in the usual way and was laid off because of Covid restrictions during the emergency period.

During the pandemic, an employee’s right to trigger redundancy was suspended so as to ensure already struggling businesses weren’t overwhelmed with costs. That provision has now been lifted, and employees can if they wish, seek redundancy if they have been laid off.

To ensure workers don’t lose out on payments and business owners aren’t faced with a flood of additional redundancy costs, the new legislation seeks to provide the best outcome for both employers and their employees, said Varadkar.

Under the existing Redundancy Payments Acts, periods of lay-off in the final three years of service do not count as reckonable service.

This means that in the case of redundancies now arising, where the qualified employee may have been on Covid-19 related lay-off for protracted periods, through no fault of their own or of their employer’s, their redundancy entitlement will not factor in those periods.

The aim of the Redundancy Payments (Amendment) Bill is to plug that gap, through a direct payment from the Social Insurance Fund.

The payment will ensure that the employee being made redundant will receive the same total redundancy payment as though they had not been laid off during the pandemic.

The amount an eligible worker will receive will depend on the length of time they were placed on lay-off due to Covid-19 before the date they were made redundant.