National Minimum Wage (Protection of Employee Tips) Bill 2017: Committee Stage

Section 1 agreed to.
Question proposed: "That section 2 stand part of the Bill."

Section 2 goes to the heart of the Bill insofar as it defines tips and gratuities, and introduces the concept of obligatory tronc schemes in all employment where tips and gratuities are a feature. I addressed the House on the Bill in January 2018 and I will take this opportunity to reiterate what I said then, which was that we all wish to protect employees and ensure they receive their entitlements. Ireland has a robust suite of employment legislation to ensure this is the case. It was recently strengthened by the addition of the Employment (Miscellaneous Provisions) Act 2018.

While I believe that, in principle, employees are entitled to keep the tips they earn and have worked for, we must distinguish in employment rights terms between matters that are the subject of specific employment rights obligations, such as wages, and matters outside the direct control of the employers, such as tips, particularly when it is intended to introduce offences into law. Last year, I raised a number of concerns in this regard that have not been addressed in the amendments that have been tabled.

We must be cognisant that legislating in this area without being fully aware of how it will impact on current practices and whether it could lead to unintended consequences could have a negative impact on employers and employees alike. For example, the section introduces a single definition of a tip or gratuity, which includes service charge but, under the National Minimum Wage Act, tips and service charges are treated as two distinct matters dealt with differently in terms of their reckonability for the purposes of calculating the national minimum wage. These are the type of issues that can lead to confusion and will raise questions about the workability of the Bill.

In the course of the earlier debate on the Bill I indicated that my colleague, the Minister for Employment Affairs and Social Protection, intended to request the Low Pay Commission to examine current practices on tips and report back with its findings. The Minister has done so and has received its report, which she will publish later this month.

As part of the deliberative process, the commission consulted a range of stakeholders, including the Government, political parties, trade unions and sectoral interests. It is vitally important the commission’s report should inform the debate on this Bill, as well as the wider debate on the approach to tipping. For this reason, while not opposing the Bill at this Stage, the Government is reserving its position on it. In particular, I flag the possibility that the Government may bring forward amendments on Report Stage.

I am not sure how that was relevant to section 2. I think it was more general.

Question put and agreed to.

Amendments Nos. 1 and 3 are related and may be discussed together.

I move amendment No. 1:

In page 4, line 28, to delete “subject to section 39” and substitute “subject to section 41”.

I welcome several guests to the Gallery this evening. I also welcome the Minister of State. We have had a tremendous interest in this Bill because it affects tens of thousands of workers in the hospitality sector. I am delighted to welcome members and activists from the One Galway and One Cork movements, which comprise trade unionists, community groups and student union members. I have received their letters and emails over the past several days. They are here tonight because they are passionate about this Bill. I also welcome some of my Dublin trade union colleagues from SIPTU. We also have had tremendous support from Mandate and Fórsa. All of these people have come together because this issue is pressing. A colleague asked me as we were coming into the Chamber if there was really a problem in the sector. There certainly is.

One in three workers in the hospitality sector does not receive their tips. We know this because of extensive research carried out in Galway by the Hospitality Alliance and my former colleague, Trevor Ó Clochartaigh, who deserves great credit for this. Out of 450 inspections of establishments in the hotel and restaurant sector carried out by the Workplace Relations Commission, WRC, in 2017, 58% involved non-compliance with employment law. This rate is truly shocking. There is no question the sector needs regulation. This is just one core element.

I acknowledge and welcome the fact the Minister of State will not oppose the Bill at this Stage. I offer our support in terms of working with the Department to address any of the concerns he has with definitions, as well as further amendments we could bring forward together on Report Stage. We cannot have these workers left in the lurch for another 12 or 15 months. It has been nine months since the Low Pay Commission was asked to report on this matter. These workers have been waiting some time.

My colleague earlier asked me what is happening in the sector. I received several emails over the past few weeks. One worker told me that they worked in a café but did not receive any tips. Throughout the summer, many bus tours, largely of Americans, visited the café who received a complimentary Irish coffee. The tips were used to pay for the whiskey for the Irish coffee.

A second worker told me:

I started working for an international chain of restaurants in Ireland. When I got the job, I started my training period, during which I was told I would receive no tips. Other members of staff told me that they were incentivised to make my training period last for as long as possible so they would get to keep my tips. Then when I passed through training, I was told a percentage of my tips were taken for breakages.

A typical complaint is that 10% of tips are taken for breakages and a further 10%, 20% or 30% is taken to balance the till if there is any shortfalls at the end of night. These are all examples which came in over the past week as to how tips are withheld. The classic example is that the money is put towards a Christmas party. A five-star hotel in the west offers this. However, if a worker leaves the employment before Christmas, for any reason, he or she will not be paid a penny. It is a deceptive means of hanging on to money.

All Members, regardless of party affiliation, understand the importance of the tourism industry. Some fantastic people work in it. Unfortunately, many of them are suffering from wage theft. That is why this Bill is so important. I acknowledge the broad support across the Chamber for the legislation. I acknowledge in particular my colleague, Senator Nash, who was good enough to come out with me last Thursday in Galway to meet people on the streets ahead of Valentine's Day. We asked those going to restaurants to ask where their tips would be going. There is a problem in this sector. I was on the Ivan Yates radio show this evening when a terrific chef, who owns four restaurants in Galway, came on. The first thing he said was that there is a problem in the sector and that people’s tips are being withheld. This disadvantages good employers and it is unfair competition when people are pocketing tips.

I appreciate that the Minister of State will not be opposing the Bill. It is welcomed by our colleagues in the Gallery. We need to work together to ensure it progresses. If we do not, we will let everybody down. This should not be a win for Sinn Féin but should be a win for all of us. It will be a great way for the Seanad if we could work co-operatively on this Bill and deliver it.

Amendment No. 1 is a simple technical amendment to refer a matter to an adjudicator rather than a mediator. I thank my colleagues in the trade union movement who suggested this to tighten the legislation. We are open to more amendments from everyone across the Chamber. Hopefully, we all have the right interests at heart.

On amendment No. 3, I thank Senator Horkan for a constructive engagement on this issue earlier today, in particular regarding the concerns of the Licensed Vintners Association, LVA. Rather than have employer involvement, it aims to have employee involvement. We do not want employers having any further complications or bureaucracy. We want employees to manage this process, as they already do in many establishments. We are seeking a set of guidelines for this to happen. Hopefully, this amendment will address one of the LVA’s key concerns.

I thought that seeing how we are all in agreement we would be brief on this.

I welcome the guests to the Public Gallery and those watching elsewhere. I commend Senator Gavan on his work on this Bill. I did not get to speak on Second Stage. It is excellent legislation and is at the core of the issue of how we treat workers with dignity and respect. Employment conditions in the hospitality sector leave many workers in the sector vulnerable. A former colleague, Trevor Ó Clochartaigh, highlighted this in the Chamber many times. Senator Gavan is doing remarkable work in ensuring this aspect of workers’ rights and fairness in the sector is secure. I commend him on it.

Amendment No. 3 allows for a tronc scheme to be established by employees rather than employers. A tronc scheme is usually managed by one designated member of staff who pools and distributes the money fairly. The employee is independent of the employer. A well-considered scheme gives staff up to 100% ownership of tips that are shared out in a way that is fair, transparent, free of bias and free of greed.

The section allows for regulation that can aid businesses in establishing such a scheme. The British Government is much further down the line on this issue. In Britain, there is a wealth of public advice on how to establish tax-compliant tronc schemes. The benefit of leaving this issue to regulation is that it allows the Department to work with the Department of Finance to establish this.

It would also allow employees to reach collective agreements on how staff initiatives such as pension schemes are paid for. This would be done with the consent of employees only. The regulations only apply in the context of offering guidance to these schemes. Their purpose is not to give rise to such schemes being imposed on businesses and staff who have not agreed to them.

This is a reasonable amendment. I urge all Senators to also support amendment No. 3.

I invite Senator Nash to speak. I ask all Senators to be as brief as possible.

I will do my very best.

I am saying that because we are all in agreement as I see it.

I also welcome our colleagues and trade union friends in the Public Gallery and those from the student movement. The latter is directly affected by this issue because many students are working in the hospitality sector and depend on their income to get through college, provide accommodation for themselves and so on.

We should not make this complicated. This should be a matter of law. There is a demand for this issue to be made a matter of law and for this to be enforceable.

We were expecting to see the Low Pay Commission's report a little earlier. I am pleased that the commission has now submitted its report to the Minister and that it will be published shortly. I was proud to work with Senator Gavan on this legislation. The Labour Party supports the principles, aims and ambitions of the legislation. We will use the Low Pay Commission's report to inform any necessary amendments that might be required on Report Stage.

Speaking directly to the amendments, the point Senator Warfield made is important. Responsibility is given to employees to manage and oversee an agreed system for distribution and management of tips. That takes the responsibility away from the employer, which is a good thing. Many employers would appreciate the kind of direction and certainty that is not there at present. Ultimately, this needs to become a matter of law in order to ensure that the rights of workers are vindicated. There should be a right for an employee to obtain a tip that was intended for him or her. It is a matter of importance for consumers who need clarity and certainty that, when they are out for a meal or having a drink, the tips they give end up in the pockets of the people for whom they were intended. I have come across too many cases where tips have, in effect, been stolen by bad employers. Most people in this Chamber agree that the playing pitch needs to be levelled and that no unfair advantage should accrue to a bad employer because he or she decides to pocket the tips to ensure that the bottom line of the business and turnover are improved and profit is supplemented.

I am happy to take the advice of the Low Pay Commission on any amendments that might strengthen this Bill, make it better and more robust. I know I speak for Senator Gavan and his colleagues in Sinn Féin when I say that they would also take that approach.

I welcome the Minister of State and thank him for the positive approach he has taken in respect of the Bill. It would be remiss of me not to acknowledge the work put in by our former colleague, Trevor Ó Clochartaigh, who went to TG4. The station's gain was Seanad Éireann's loss. He is a great man. I am not in any way denigrating the work put in by Senator Gavan on this Bill but Mr. Ó Clochartaigh did a huge amount of work in respect of it.

I will cut to the chase because I know the Leas-Chathaoirleach is anxious that we do so. One matter that has affected the people in the Public Gallery is card payments. A customer pays a bill at the end of the meal and, generally speaking, includes a 10% tip. They stick it on the card and €100 becomes €110. The customer walks away and forgets about it, thinking they have given the people a tip.

The employee never sees it.

The bad employer pockets the €10 and it is gone. The people we are talking about are those to whom Senator Nash referred - students and individuals at the bottom end of the salary scale. Bad employers are making profits they should not make. Good employers always hand over the money. As a former trade union leader, I must be here to support this Bill in every way. I appreciate the Minister of State's positive approach to it. As a result of that approach, we are going to see this Bill become law.

I know the Leas-Chathaoirleach is anxious for brevity. However, I will have plenty to say on one of the amendments.

I welcome the Minister of State. I join others in commending Senator Gavan. One of the first points around which this Seanad came together was that relating to workers' rights. It was the Competition (Amendment) Bill, a legislative measure proposed by the Labour Party, that first brought us together in that way. I commend Sinn Féin. I also want to commend, as others have, former Senator Trevor Ó Clochartaigh who has done great work with One Galway and other groups that have been campaigning and bringing this issue and all of the real stories of people's experiences in the hospitality industry to the fore.

I want to address the amendments and the Minister of State's points.

Will the Senator speak on the amendments?

This is related. In the context of this section, there was concern about clarity as to, for example, what a service charge is and what a tip is. The way the language is currently phrased is quite good because it refers to what might reasonably be interpreted. It sets the position out quite clearly. It is not overly prescriptive in that it states that the customer intended or assumed the payment would be redistributed to the employee or employees. The Bill contains sections whereby there is provision such that the policy of any individual establishment should be published. That allows for any ambiguity to be cleared up. I know the proposer of the Bill is happy to work to add further clarity as it might be needed. There is already provision in the Bill that might be able to address those concerns in due course.

It is great that we will get the report from the Low Pay Commission. We know that many union activists were out campaigning on St. Valentine's Day for this Bill and the right for workers to access their tips. People will travel to Ireland on St. Patrick's Day for the welcome, the relationship and the reception they get in our pubs, restaurants, cafes and all parts of the hospitality industry. It will be unfortunate if we go into the summer without having got this Bill through. It is good to have that report from the Low Pay Commission but it will be imperative that all of us work together, across this House and in the Lower House, to ensure that we go into the summer with real clarity.

Workers in the hospitality sector have had a decrease in clarity. I launched the task report on precarious work where there has been a lack of predictability. This gives predictability when, unfortunately, employers have been slow to engage with the joint labour committees and some of the other areas of clarity. The Government's legislation on banded hours will help to some degree but this is another key way to give predictability and planning and ensure there is a sense of recognition for the work that is done.

Speaking specifically to amendment No. 3, this was my only concern with the Bill and I am happy to see it addressed. When I worked in restaurants, I never made it to the position of waiter but I was a busser. I was the water deliverer, snack provider, menu layer and all the rest. I like that the Bill makes reference to tronc schemes. This amendment makes it clear that it is for employee involvement. I am sure it is the intention of the amendment, as the proposer will confirm, that it will refer to all of the relevant employees. That is why I am keen to see that specific amendment brought in and to see benefits for all of those who are contributing.

Again, tips are about the relationship between people who access services and those who provides them. They are not petty cash. They are not a bonus for employers. We need to confirm that. They are a direct relationship and a kind of contract that exists between a customer and an employee.

This is a good Bill because it brings us further along the road. I thank the Minister of State for taking it on board and I hope he will also take on board the concerns about the need to expedite its passage subsequent to his own amendments.

I note that we are officially discussing amendments Nos. 1 and 3-----

-----but I think almost everybody has managed to give an entire speech about everything in the Bill.

There have been Second Stage-style speeches. I have allowed a little latitude.

I am not going to make a Second Stage speech, but-----

Lots of people have to do so. The reality is this is important.

I never saw a House as agreeable as it is in regard to a Bill.

I am being agreeable, as always. I will mention amendments Nos. 1 and 3 first, and then I will get onto the stuff everyone else was doing before they mentioned those amendments. I have no issue with the question of adjudicators versus mediators. I welcome amendment No. 3. I outlined a concern to Senator Gavan earlier. One of my nominating bodies represents Dublin publicans, namely, the Licensed Vintners Association, LVA. I asked for its members' opinion on what was going ahead. They do not feel there is a major problem in their particular sector. That is what they focus on. I am not taking anything away from the Vintner's' Federation of Ireland, VFI. It is hard to get good staff and employers want to reward good staff. Publicans have loads of different ways of doing it. Some pay more to kitchen staff because they do not get tips, while others pay a lower rate to workers who get a share of the tips. There are loads of different ways to do it. The LVA was concerned about becoming responsible for all the tips, dealing with the rows and assigning a members of staff to deal full-time with tips, credit cards, service charges and all the other complications. That organisation had not seen the amendments until they were published yesterday. Its members are happier that this is the case. They are of the view that an employer should never withhold tips in any scenario. They are not interested in that. I do not know what hotel chains or high-end restaurants do, but it is not what they are interested in. They want to protect the person who earns the tip for good service.

There are times when I want to give a certain person who served me a larger tip than someone else. He or she may have been much more hospitable and better at the job than someone else. I do not know how that can be done in a group scheme. There are different ways of doing it. One establishment will do it one way and a different establishment will do it another. To each their own. It is a voluntary tronc scheme. It does not have to be done, and I am sure lots of people will decide that if things are working as they are in their business it does not have to change.

If legislation is needed, which is clear from what Senator Gavan says, it is needed in some parts of the hospitality industry more than others. My party's position is to support this. We have made a submission to the Low Pay Commission and we await the publication of its report. I have one concern. Perhaps the Minister of State could address it at some point. I do not know how Revenue currently deals with tips. If arrangements became overly prescriptive, people might end up liable for pay as you earn, PAYE, universal social charge, USC, and pay-related social insurance, PRSI, contributions that they currently are not. Perhaps they should declare it, but they may not be. They might end up worse off after the scheme was introduced than before. I know that is not Senator Gavan's intention. That is my concern. Perhaps the Minister of State can address how these schemes work. Is it all done by self-declaration?

Amendment No. 1 is perfectly fine. In regard to amendment No. 3, I am glad it has changed from "employer" to "employee". I thank Senator Gavan, former Senator, Trevor Ó Clochartaigh, and all the Members who have contributed to this discussion and to getting this to the next Stage.

I am very pleased to be able to speak on this Bill-----

We are discussing amendment No. 3.

-----and on the amendment. I remind the Leas-Chathaoirleach that this is Committee Stage. He will tell me if I am wrong. There is no limit on speaking time.

For amendments Nos. 1 and 3, but I am anxious that we are all agreed-----

The Leas-Chathaoirleach is entitled to his anxiety and I am entitled to my time.

I appreciate that.

I just want to forewarn him of that. If he interrupts me, I will stay on my feet for as long as possible.

I do not want anyone being cheeky. I have not pulled anybody so far.

I was not being cheeky.

It is terrible when Fine Gael Members row.

I want order. We are going to listen to Senator Reilly now.

I will mention those lovely words, "without interruption". I welcome this Bill. I also welcome the work that Senators Gavan and Nash and former Senator, Trevor Ó Clochartaigh, have done on it. This Bill is important and well worth discussing, and the amendments that have been moved are also important. The previous speaker mentioned that the LVA would have serious concerns about being involved in tips, which most of them are not. I believe most employers are good employers. They encourage tips and ensure that the staff get them. However, there are those who do not. That is clear and Senator Gavan has made that point eloquently. As a student, I worked in the industry myself years ago. People have mentioned students. This industry is an important source of income to get them through college. There are many more people who work in the industry full time. This is a significant part of their income. In reply to comments on how this might be treated by Revenue, I note that the other word for a tip is a "gratuity". It is, therefore, free and I hope it will remain free from the Revenue Commissioners' attention.

This House has generally been good at passing Bills that make sense without any party politics. I welcome the opportunity to support this Bill on behalf of the Government.

I am mindful of the fact that this is Committee Stage. I hope the Leas-Chathaoirleach will allow me the opportunity to commend Senators Gavan and Warfield and former Senator, Mr. Ó Clochartaigh, on this Bill. It can be summed up in three words: transparency, trust and fairness. The priority is not merely justice for service sector employees, but also confidence for the customer that his or her tips go directly to the server and perhaps their extended team, not elsewhere. Many of us have recently heard stories about what can go wrong when trust between employer and employees breaks down. I refer to an article in The Irish Times about the Ivy restaurant in Dawson Street. Perceived injustice weakens morale, reduces productivity and leads to high staff turnover. This ultimately harms the employer, the employee and the customer.

In regard to these amendments, service sectors employees are right in seeking to safeguard their tips. Tips are an earned reward for work well done, often under pressure, and not a privilege as some more questionable employers often make out. We should remind ourselves, however, that tipping exists to supplement an employee's income, not to replace it. The obligation to pay staff always remains with the employer. We should keep in mind that upholding the human dignity of the employee need not come at the expense of the freedom of the employer. We should seek clarity and transparency in how tips are collected and distributed, but the State should not cross the line into dictating to companies exactly how they should structure and divide tips between employees. Every private sector enterprise is different, and a one-size-fits-all solution is not possible. I am glad that this Bill shows an awareness of that and makes special provision for employers to share in tips if they themselves directly participated in the work , as is the case in many smaller companies.

How a business deals with tips should be communicated to employees before they accept job offers. If this was the case, we could allow the market to decide what works and what does not. We need to create a level playing field and mandate total transparency. Managing how tips are distributed between staff is a delicate process. It can justifiably differ from one workplace to another. Redistribution recognises the work done by non-front-of-house staff, which is often unseen but nonetheless vital to the customer's experience. Tips encourage meritocracy and teamwork and they ought to be protected. This Bill is as modest as it is impactful. I have no doubt that it will be appreciated by service sector workers across the country, and I look forward to the continuation of the legislation.

This proposal will be welcomed by members of the unions in the Gallery, particularly the Union of Students in Ireland. I acknowledge that it is not just students who avail of tips. People of different ages and generations work in the hospitality sector. Like my colleague, Senator Alice-Mary Higgins, I worked in the hospitality sector, in a café in Tramore, as a single mother with three children. The tips did help. It was not just the money in my pocket, but the sense of acknowledgement that the service I provided was appreciated.

I will speak specifically to amendment No. 3. I refer to the tronc system. It is welcome that employees should decide among themselves the system they will use to share tips. There are front-of-house staff but there are also staff working in different capacities in the background and the amendment is, therefore, welcome. It also shows trust in staff. It teaches collaboration and how to be fair and square in a sector where, by and large, contracts of employment are at the lower end, as others Senators have said. That is why I very much support Senators Gavan and Warfield and all those who have put forward this Bill on behalf of Sinn Féin.

I also acknowledge that the Minister of State's support for the Bill. It is good that it has cross-party collaboration and support.

Amendment agreed to.

I move amendment No. 2:

In page 4, to delete lines 36 and 37 and substitute the following:

"(iii) require the employer to pay to the employee compensation of such amount as is just and equitable having regard to all of the circumstances, and".

The wording, as revised, seems to be in line with the wording in the Workplace Relations Act which, for the sake of consistency, would seem to be a good thing. Unfortunately, in making this deletion, it seems that the obligation on the adjudication officer to make a decision seems to have been lost with the result that it seems to imply that an adjudication officer shall hear a case and make an award. I would prefer that the reference to the making of a decision by an adjudication officer would be retained as I believe it would bring greater clarity to the provision.

The purpose of the amendment is to allow an employee to seek compensation for the breach together with an award for the amount withheld or deducted. As with the previous amendments, I want to take on board the Minister of State's comments. I offer to work with the Department prior to Report Stage to tighten up the wording as best we can.

We will deal with that on Report Stage. That is probably agreed.

The research conducted by my colleagues in Sinn Féin in drafting the Bill made for some difficult reading. The incidence of tips not being passed on to staff is much higher than any of us would like to think. This is an important amendment and it provides an avenue for redress for employees whose rights have been breached under this legislation. As a former trade union leader, I find it regrettable that this issue of tips could not have been resolved a long time ago through collective bargaining mechanisms. This legislation, therefore, provides the only avenue by which workers can pursue this. Workers need to be given statutory rights that will be upheld in court. I hope the amendment has a strong deterrent effect on employers, which will in time lead to good practice becoming the norm rather than the exception. The passing on of tips is a problem in many countries, yet the giving of tips is not. We have all had the experience of putting money under the salt and pepper on the table in a restaurant, popping it into a jar, giving it to a waiter or waitress or adding it to a credit card payment, yet we have no idea if those tips reach the people for whom they were intended.

As a country which is so dependent on tourism, the quality of service in our hospitality sector is world renowned. There is a very big difference between eating a meal in a restaurant and having a memorable dining experience especially, but not exclusively, on a special occasion. The giving of tips is an acknowledgement of the added value. It is as important for the giver as the receiver.

We are on amendment No. 2. The Senator should finish up.

Not knowing who gets it or where it goes is unsettling for everyone involved. I can even imagine how demotivating it must be for highly trained, committed and generous staff to have an important token of appreciation withheld from them. I fully support the amendment and hope the Minister of State sees fit to support it.

I thank the Senator

Very, very briefly -----

That was very briefly.

We have all, at some stage, worked in the hospitality sector. We knew the abuses that went on with bad employers. In my youth, I worked in a hotel where staff had to work a week in hand and would get paid at the end of the second week. The employer fired everyone on the Thursday of the second week-----

Oh my God. That is dreadful.

-----so he never had to pay us. The employer was renowned for it. There are great employers out there and we must recognise them. We were talking about students. I received letters from the president of the Union of Students of Ireland on this.

He is still talking. He said that he would not be long.

There are great employers and we must recognise them. I hope that the amendment will be accepted.

I welcome what Senator Craughwell said and very much appreciate his support. The importance of getting the compensation right is because of the damage that is done to people. I will give an example my office received last week. This relates to a lady works in a restaurant who knows that the tips will never go to her. The tips are left and are gathered by management. In order to get a tip from friends when they dine in the restaurant, she must meet them surreptitiously in the bathroom. That is the reality and this is documented. I would like to acknowledge the role played by NUI Galway, and Dr. Deirdre Curran in particular, in gathering many of these testimonies. This is happening today and that is why compensation is so important.

It seems the Senator agreed that before Report Stage he and the Minister of State will discuss this.

Amendment agreed to.

I move amendment No. 3:

In page 5, line 8, to delete “for employer involvement” and substitute “for employee involvement”.

Amendment agreed to.

Amendments Nos. 4 and 5 are related. Amendment No. 4 is consequential on No. 5. Amendments Nos. 4 and 5 may be discussed together by agreement. Is that agreed? Agreed.

I move amendment No. 4:

In page 5, line 9, to delete “Subject to subsections (d) and (e)” and substitute “Subject to paragraph (d)”.

The amendments provide for the deletion of the originally proposed definition of employers who might be entitled to share in tips in certain circumstances. It seems to seek the use of existing legislative provision to define the type of employer who may participate in the distribution of tips rather than the introduction of a new definition. However, the relevance of the associated employers definition and how it might be relevant to the types of employers, for example, sole proprietors or partners who might currently share in tips is not at all clear and, therefore, I have reservations about the proposed change in definition without such clarity as to the intention.

Section 3 defines tips as though they were wages owing to the employee. Many questions remain open. Without a proper paper record of the tips practice, it is not clear how this can be enforced by inspectors from the WRC. Who will keep these records? Who will be responsible for them? Without proper factual record keeping, what protections will be in place for the employer or employee? If tips are to be treated as almost akin to wages should they be processed through the employer's payroll and taxed? There are many issues as to how this Bill would operate that are not clearly enough defined or set out.

The amendments are specific to owner-managers of pubs and so on. The information can be on the menus or it might not be. If we are going to have information put on menus, we can have a lead-in time so that places do not need to reprint menus that they had printed the previous week because of the legislation. Many of us tip, whether it is lounge staff or someone working in a restaurant. One will often pay for a meal by credit card and give the tip in cash so that somebody gets it. I understand that in places where there is a compulsory service charge of 10% or 12.5% for groups over six, for instance, that often does not go to the employee, although people might think that it does. The Minister of State or Senator Gavan might confirm my understanding that those service charges at whatever rate will end up in a pot controlled by employees to be distributed among staff one way or another, whether it is lounge staff, bar staff, chefs, waiting staff and so on.

Under this Bill, a tip, be it 10%, 12%, 15% or 20%, will end up in a pot to be controlled by employees and distributed among them, be that kitchen staff, chefs, lounge, bar and waiting staff and so on. As already stated by Senator Reilly, the concern is that the system could become so organised it would come to the attention of Revenue and it might deem the gratuities received by each staff member to be additional income and, therefore, subject to tax. I do not think any of us want to see a situation where this money would be subject to USC, PAYE and PRSI. Also, the employer could be deemed liable because he or she knew this was happening within the business. We are doing great work in terms of this Bill but we need to be careful that we do not end up doing a disservice to these people who are, by and large, generally in the lower-paid sector of society.

I take on board what the Minister of State said. We have designed this Bill on existing legislation in Ontario, which has been in place now for a couple of years and no issues have no arisen. This Bill is almost identical to that legislation. The Minister of State said that there is a danger of us being overly prescriptive. That is not what we want to do and I do not think we should do that. There are two key aspects to the Bill. First, it seeks to give legal rights to the employees in question in regard to tips and I welcome the positive commentary in this regard from across the Chamber. We are all in agreement that this needs to happen. Second, the Bill provides for transparency for the consumer. I take on board Senator Horkan's comment about the need for a lead-in time in regard to this provision. The way forward could be for the information to be provided on a notice board rather than on a menu, for example. This issue could be easily addressed.

I look forward to working with the Minister and the Department on the Bill. There is no need to be overly prescriptive. This is legislation that works easily in Ontario. We know that the British Government has also acknowledged it needs to address the issue in the UK. If the maddest, most ridiculous Tory Government can recognise that something needs to be done to protect employees, we should be able to reach agreement on the issue.

I am not sure the Senator would agree with it on anything else.

Senator Horkan is correct in that regard. Let us tease out the issues. We know this legislation works. It is not in any of our interests to make it overly prescriptive because then it would be damaging to employers. There are no tax implications.

Taxes are not referenced in this Bill. They are not part of this Bill and there will be no tax implications.

Amendment agreed to.

I move amendment No. 5:

In page 5, to delete lines 12 to 24 and substitute the following:

"(d) An employer who is an ‘associated employer’ as recognised in the Employment Equality Act 1998, may share in tips or other gratuities redistributed under subsection (1) if he or she regularly

performs to a substantial degree the same work performed by—

(i) some or all of the employees who share in the redistribution, or

(ii) employees of other employers in the same industry who commonly receive or share tips or other gratuities.".".

Amendment agreed to.
Section 3, as amended, agreed to.
Question proposed: "That section 4 stand part of the Bill."

I have previously expressed our concerns about the nature of the sanctions proposed in this instance. This continues to be a source of concern. The Bill is unclear regarding accountability. While everyone would agree that actions such as withholding tips or deductions from an employee's tips are unacceptable, section 4 introduces a criminal offence in respect of the employer in this regard, including upon conviction, a fine or imprisonment. This seems to be particularly unfair given that the employer may have no input in the administration of the distribution of the tips. It might even be argued that any attempted prosecution could fail on the grounds of a lack of fair procedure. We need to consider this carefully before proceeding with the Bill.

The Minister of State might engage with Senators on that issue before Report Stage.

My officials will work with Senators on it.

Question put and agreed to.
Sections 5 and 6 agreed to.
Title agreed to.
Bill reported with amendments.

When is it proposed to take Report Stage?

Report Stage ordered for Tuesday, 26 February 2019.

When is it proposed to sit again?

Next Tuesday at 2.30 p.m.

The Seanad adjourned at 8.05 p.m. until 2.30 p.m. on Tuesday, 26 February 2019.