The Government is expected to make changes to new tipping legislation, which will effectively ban so-called ‘service charges’ on bills unless the money goes straight to staff.
The new law, the Payment of Wages Bill, is currently making its way through the Oireachtas.
It is designed to prevent employers from using tips or gratuities to make up basic wages, and to introduce transparency about how tips and service charges are distributed.
Minister of State Damien English will introduce the amendment relating to service charges in the Seanad this afternoon.
It will prohibit employers describing a mandatory charge applied to customers as a ‘service charge’ or similar term unless those payments are treated by the employer in the same way as electronic tips or gratuities.
Announcing the changes, Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar said that currently customers cannot be sure what service charges are used for or whom they go to.
“Voluntary service charges are clearly the same as a tip or a gratuity but by definition, mandatory service charges are not,” he said.
“As things stand, you’re expected to pay, without any information on where the money goes,” he added.
“I’m happy we’ve been able to come up with a solution now, which will effectively ban employers from using the term ‘service charge’ or any similar term, unless the money goes straight to staff,” Mr Varadkar said.
Once the new law comes into force, employers will have to be explicit about additional charges and about where the money goes.