The Payment of Wages (Amendment) – Tips and Gratuities

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The Payment of Wages (Amendment) – Tips and Gratuities

The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 is due to come into effect on the 1st of December 2022.  There will be 4-week period between now and the 1st December that will allow for employers to prepare for the required changes under this new law.


The Act requires employers in certain sectors to pass tips and gratuities to staff.  Any charge which is 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 members.


The Act will also prohibit employers from using these tips and gratuities to ‘make up’ an employee’s basic wage and will provide more information to consumers about how their money will be distributed should they decide to leave a tip.


The main sectors which the Act will apply to are as follows:


  • Tourism
  • Hospitality
  • Hairdressing
  • Taxi
  • Delivery Services

Note: there may be additions to this list in the future.

Purpose of the Act


The purpose of the Act is to:


  • Force Employers to clearly display their Policy on the distribution of both cash and card tips.
  • Give clarity on the meaning of tips, gratuities, and service charges.
  • Compel Employers to distribute fairly, equitably and in a transparent manner tips that are received electronically.


Employer Obligations


  1. Policy

Employers must provide evidence of a clear policy in a clear and transparent way, visible to the public, describing how cash tips, card tips, gratuities and service charges are distributed.



Distribution of card or smart phone tips

Employers can consider certain factors when deciding how to distribute tips, including:


  • Seniority or experience
  • The value of sales or revenue generated
  • The number of hours worked
  • Whether the worker is on a full-time or part-time contract
  • The worker’s role in service delivery

Employer must give a statement of the tips and gratuities distributed, including the total amount of electronic tips received during a particular period and how much is being paid. This statement must be given within 10 days of the tips and gratuities being distributed.


Distribution of cash tips

Cash tips are usually paid directly to the worker.


If tips are managed by employees themselves, for example under a ‘tronc’ system, the distribution rules above do not apply.


  1. Notice

An Employer is required to display a ‘Tips and Gratuities Notice’ for their Employees and customers to be able to view.  The ‘Tips and Gratuities Notice’ must clearly state:

  • whether tips or gratuities are distributed to and amongst employees,
  • if they are distributed to and amongst employees, the way they are distributed and the amounts so distributed,
  • whether mandatory charges, or any portion of them, are distributed to and amongst employees, and if so, the way they are distributed and the amounts so distributed.


The notice should also include any further or additional information as may be prescribed by Regulation in the future.  It is important to note that any employer who contravenes these display obligations is guilty of an offence and would be liable on summary conviction to a Class C fine.


  1. Written Statement

This is a written document that an Employer is legally obliged to produce detailing the distribution of tips/gratuities.  All Employees should receive the written statement.


How the rules are enforced

All electronic tips received by the employer must be distributed fairly and in a transparent way.

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

There is a complaints procedure and the Workplace Relations Commission (WRC) can order an employer to reimburse any unlawful tip or gratuity deductions