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Learn about tips, gratuities and service charges.

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 comes into effect on 1st December 2022. If you are wondering “what have I to do to comply with the legislation?” then you have come to the right page. In this article we examine in detail the The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022. We look at who is affected by it and how employers can distribute tips and gratuities in compliance with the act.


Who is covered by the The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022?


The new rules apply to employers in the following service areas:

  1. The sale of beverages (including intoxicating liquor) or food for consumption on the premises at which such beverage or food is sold.

  2. The sale of beverages (including intoxicating liquor) or food by means of casual trading.

  3. The accommodation of overnight guests on a commercial basis in a hotel, guesthouse, hostel, bed and breakfast, self-catering accommodation facility or any similar accommodation facility.

  4. Providing guided tours.

  5. Carrying out non-surgical cosmetic procedures including the following: cosmetic nail care; nail styling; skin care; hair care; hair styling; tattoo services; and piercing services.

  6. Gaming.

  7. The provision of services as a licensed bookmakers.

  8. Providing transport services by means of a public service vehicle other than services provided under a public transport services contract, services provided under a public bus passenger service licence, services provided exclusively for carrying children to or from a school.


What tips, gratuities and service charges are covered?


The Act deals mainly with electronic tips. An electronic tip is a payment made by any means other than cash. These include:

  • By smart card

  • By credit/debit card

  • By using apps designed to facilitate payment of tips and gratuities

  • By way of “push notification” app


Cash tips and gratuities would be too difficult to police and are not covered in the Act except for the requirement that employers will be required to include detail on how cash tips are distributed when displaying their policy on tips and gratuities. Businesses must display their policy on how tips, gratuities and service charges are distributed in a position where it can be clearly read by the consumer. Mandatory service charges must be distributed regardless of how they are received.


How are service charges affected ?

Where businesses impose a mandatory service charge on their customers, they must distribute that charge among the appropriate staff members, whether it is received electronically or otherwise. It is an offence if they do not do so. A ‘mandatory service charge’ is a contractually imposed and receipted payment that a customer must pay, in addition to the cost of certain goods or services.


Where an employer performs the same work as staff

An employer may keep a share of tips given electronically where the employer can prove they perform, to a substantial degree, the same work performed by the employees who receive a share of electronic tips. Any share of tips kept by an employer should be no more than an amount that is fair and reasonable in the circumstances.


More definitions

A tip or gratuity

The Act defines a tip or gratuity as a payment that is voluntarily made to, or left for, an employee or group of employees by a customer, in circumstances in which a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept by the employee or shared with other employees. This includes a contract worker


Contract worker

In the Act, ‘contract worker’ means a natural person who carries out work other than as an employee, including on a contract for service, for a person to whom this section applies

Platform workers

Platform workers who are not direct employees are included in the legislation. An online platform means a website or digital mobile application.

Some Do’s and Don’ts for employers


  • Display your tips, gratuities and service charge policy in a prominant position

  • Agree with the relevant staff members on the method and frequency of distribution of the tips, gratuities and service charge

  • Provide a statement to workers showing the amount of tips obtained in a period and the portion paid to the individual employee for that particular period within 10 days of the distribution.

  • Decide if there is to be a charge for the cost of administering the scheme. This can only be based on the actual expenses incurred.


  • Use the tips to make up wages. This is forbidden in the Act and will lead to a substantial fine on conviction

  • End up having to pay the maximum fine of €2500



What factors, should I as an employer, take into account when deciding on a fair distribution method?

Factors to be considered when deciding how to distribute tips include

(a) the seniority or experience of the employee,

(b) the value of sales, income or revenue generated for the business by the employee,

(c) the proportion or number of hours worked by the employee during the pay period in which the tip or gratuity was made,

(d) whether the employee is on a full-time or part-time contract of employment,

(e) the role and influence of the employee in providing service to customers,

(f) whether the employee was consulted in relation to the manner of distribution, and

(g) whether there is an agreement, whether formal or informal, between the employer and the employee providing for the manner in which tips or gratuities are to be distributed.


What can an employee do if they are not happy with the way that the tips, gratuities and/or service chargesare being distributed?

If an employee is not satisfied that the distribution system is fair, they must bring the matter to the attention of the employer in the first instance. If that fails to resolve matters, then they can refer the complaint thee the Workplace Relations Commission. This must be done within the normal six month period for making a complaint.


Where can I get help with producing a compliant tips and gratuities policy?

If you would like some interactive assistance in producing a compliant tips and gratuities policy

just click on the button below for more information on this service.

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