Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022: Second Stage

Question proposed: "That the Bill be now read a Second Time."

Minister for Enterprise, Trade and Employment (Deputy Leo Varadkar)

I am pleased to introduce the Bill to Seanad Éireann. I have set three objectives in my role as Minister for Enterprise, Trade and Employment. These are as follows: to help businesses respond to Covid and Brexit and to survive and prosper again; to restore and exceed pre-pandemic employment levels by achieving a target of a record 2.5 million people at work in Ireland by 2024 and ensure there are job opportunities in all parts of the country; and to create jobs with better terms and conditions, that are more sustainable, secure and valued. As part of implementing this third policy, I plan to establish five new workers' rights this year. These are a new public holiday, statutory sick pay, the right to request remote working, new rights around redundancy for people laid off during the pandemic, and better protection of workplace tips.

As today is 1 February, it is fitting to mention that from next year we will have an extra public holiday at the start of February to mark Imbolc or St. Brigid’s Day. It will be observed on the first Monday of February, except where 1 February falls on a Friday in which case it will be observed on that day. This will be the first Irish public holiday named after a woman who is also a Christian saint. It marks the half-way point between the winter solstice and the equinox at the beginning of spring which was the Celtic new year. The creation of a tenth public holiday will also bring Ireland more into line with the European average.

Turning to the Bill before the House on tips and gratuities, I acknowledge the role of the Leader of the Seanad, Senator Doherty, in its development. She made significant progress on it during her time as Minister in the last Government and I look forward to working with her and all of the House as we bring it through the Oireachtas. I also acknowledge Senators Warfield and Gavan, and former Senator Ó Clochartaigh, for their Private Members' Bill on this matter in the previous Seanad. I am aware that other parties had different proposals to the Government. I am sure this Bill is not perfect and can be improved, and I am open to amendments that are workable, beneficial and constitutional. I thank the Low Pay Commission and the Workplace Relations Commission for their practical advice on this matter.

On the face of it, this seems like a straightforward issue. As is often the case, when we delved into it more and more we found it was not. It is difficult to find the right way to approach some of the nuances. We have done the best we can to do so. To provide some background and context, there has been anecdotal evidence that a minority of employers, particularly in the restaurant and hospitality sectors, sometimes use tips or gratuities given by customers and intended for staff as a means of meeting their payroll obligations and other overheads. There is no legislation which obliges employers to pass on any tips received by them to their staff. Therefore, customers have no way of knowing for sure whether the tips they left were given to the intended recipient or recipients, and the workers have no protection if their employer chooses to keep some or all the tips left by customers.

While most employers treat their staff very well, we have all heard stories that some tips are simply included as part of overall business income or used to contribute to employees' contractual base wages. With this in mind, a Bill was brought forward by Senator Doherty when she was Minister for Social Protection. It underwent pre-legislative scrutiny before the Joint Committee on Employment Affairs and Social Protection on 10 October 2019 and the committee’s report was published on 11 November 2019. The legislation fell when the general election was called in early 2020.

The Low Pay Commission and the Workplace Relations Commission have advised that heavy regulation in this area is not necessary and could even backfire by undermining some informal arrangements that are working well from the point of view of workers. We have also been strongly advised that trying to regulate cash tips too tightly would be unenforceable where those cash tips are controlled by staff and never go through the employer's books. The main sectors to which the Bill will apply are tourism, hospitality, hair and beauty, taxi and delivery services but legally it will apply in all settings and this needs to be borne in mind. This is not just about restaurants and bars.

I emphasise that it is important that the tourism and hospitality sectors are seen as valued and sustainable career choices. The Bill will bring clarity and transparency to this important aspect of the tourism sector work experience. These sectors tend to attract younger people, students and migrant workers for whom English is often not their first language. A recent survey undertaken by Unite the Union, along with research carried out by Dr. Deirdre Curran of NUI Galway, found that a significant number of workers simply do not know their employment rights. The Bill will have a beneficial impact for all these groups and will provide clarity and transparency on the meaning of tips, gratuities and service charges. It will also give customers clear information on where their tips and service charges go. Many customers believe service charges are tips. This is certainly not always the case.

The Bill has a number of main aims. It will prohibit employers from using tips and gratuities to make up contractual rates of pay. An employer cannot make a deduction from a person’s wage regarding tips. The policy intent is to ensure tips and gratuities are additional to the wages in all circumstances. The Bill will provide a legal entitlement for workers to receive tips and gratuities paid in electronic form, that is by debit or credit card or other electronic means such as apps, with a provision that these tips and gratuities should be paid out to workers in a fair and transparent manner.

The employer must 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. An employer may not retain any share of tips received electronically, unless such retention is required by this Act, for example, to pay tax or bank charges arising from providing electronic modes of tipping, or only where he or she regularly performs to a substantial degree the same work performed by some or all the employees, such an amount that is fair and reasonable in the circumstances. The Bill will also require businesses to clearly display their policy on how tips, gratuities and mandatory service charges are distributed. The customer will be better informed about how tips are treated. The Bill also provides for similar provisions for new models of work such as platform workers who are not employees but their work typically attracts tips, for example, food takeaway delivery apps.

While employers will be required to include detail on how cash tips are dealt with when displaying their policy towards tips and gratuities there will be no other regulation of cash tips as this is, according to the WRC, not workable. Cash tips are not accountable and are not under the control of the employer. They are controlled by the staff and to bring them under the control of the employer or legislation such as this could have unwelcome consequences for workers in terms of income tax and social welfare as receipt of them would no longer be a matter of self-declaration.

Payment of tips and gratuities by electronic means, in contrast to cash tips paid directly to the worker go through employers’ books and the employer is in control of how these tips and gratuities are distributed. The electronic record generated by this payment method will facilitate inspections by the WRC.

With an ever-increasing number of ways of tipping using cashless and contactless apps such as Strikepay and TiPJAR, the payment of tips by electronic means may well become the predominant way of tipping staff into the future. It should be noted that tipping apps can be utilised to ensure electronically paid tips go to staff directly and not through the employer.

There will be no interference with schemes where tips are managed by employees themselves, for example, under a tronc system. These can continue to operate as they currently do. A tronc scheme is a common fund into which tips and gratuities are paid to be divided out among staff according to a certain formula. The employer has no role in determining the allocation of tips. Troncs are common in hospitality, gambling and leisure sectors. The operation of these schemes is not affected by this Bill.

There will also be no change in the tax treatment of tips and gratuities. At the moment service charges are a grey area. Many customers believe that a service charge is a tip. This is not the case, at least not in law. The Bill will maintain the position that mandatory service charges levied by a business, as distinct from voluntary and discretionary tips and gratuities, form part of business revenues. I have asked my officials to consider an amendment that would prohibit the use of mandatory service charges to make up wages and to require that they go to staff as income. Discretionary service charges, however, will fall within the Bill’s definition of "tips and gratuities" and the Bill will apply to these types of voluntary customer payments. Our understanding is that a portion of mandatory service charges often go towards tips. For example, a hotel may have an arrangement where it has been agreed with staff that out of all 12% mandatory service charge, 3% goes to the staff as tips. By requiring businesses to display their tips and service charge policies, this will ensure transparency.

Regarding redress, an officer of the WRC when adjudicating on a complaint may take into account certain factors when determining whether tips were distributed fairly, including the seniority or experience of an employee, the value of sales generated by him or her and the number of hours worked. All employees must be consulted on the policy that is introduced.

I am conscious of cost concerns for businesses when introducing any new laws, particularly small and medium enterprises and those along the Border competing with businesses in Northern Ireland where workers' rights are different, often weaker and wages and costs lower. There may be a minor cost burden to industry with employers having to prominently display a statutory notice on the employer’s tips and gratuities and mandatory service charges policy. However, information will be provided by my Department and the WRC in the form of templates for policies on tips to assist employers to develop their own policy and to help them identify the types of information and procedures that should be outlined and displayed in their policy. These templates will be promoted and circulated widely to assist with compliance and help minimise the burden on micro and small enterprises. The requirement for employers to provide a statement to workers when a payment is being made will also impose a burden. However, as this requirement applies only to electronic tips, the existing electronic records will aid in the efficiency of producing the statement and minimise the administrative burden involved.

I will now provide a brief explanation of the various sections of the Bill. Section 1 provides for definitions used within the Act.

Section 2 inserts new definitions for "tips", "gratuities" and "mandatory service charges" in the Payment of Wages Act 1991.

Section 3 inserts four new sections, 4A to 4D, in the Payment of Wages Act 1991. The new section 4A will enable me, as Minister, to make regulations to prescribe the employers or class of employers to which the new sections 4B to 4D of the Payment of Wages Act 1991 will apply. It will also enable me, as Minister, to prescribe by regulation an employer or a class of employers, to which sections 4B to 4D do not apply. Under the next section 4B, employers will be required to distribute fairly and in a transparent manner tips that are received in electronic form through debit or credit cards, other smart-type payment cards or payment apps, as the case may be. Employers will not be allowed to retain any share of tips or gratuities received by an employer electronically unless such retention is required or permitted by this Act. Only where the employer regularly performs to a substantial degree the same work as is performed by some or all of the employees will the employer be allowed to retain an amount that is fair and reasonable in the circumstances - in other words, a share that is proportionate to the amount of work that he or she, as employer, performs.

In considering a complaint on whether a distribution of tips and gratuities to an employee is fair, an adjudication officer of the WRC might have regard to all the factors or circumstances that he or she considers relevant. Section 4B also requires an employer to provide a statement to workers showing the amount of tips, including discretionary service charges, obtained in a period and the portion paid to individual employees for that particular period. This will further ensure transparency in the amount of tips shared. An employer before establishing or making a material change to his or her policy on the distribution of tips or gratuities or the treatment of mandatory service charges will be required to consult with those employees.

A new section 4C will prohibit an employer from making a deduction from an employee’s wages in respect of tips or gratuities made to, or left for, an employee, or make a deduction from an employee’s tips or other gratuities other than as required under statute or by any instrument made under statute, or to the extent required to meet costs directly arising from providing electronic modes of payment for tips. A new section 4D requires the employer to display a tips and gratuities notice stating whether tips or gratuities are distributed to and among employees, the manner in which they are distributed and the amounts so distributed, and also whether services charges, or any portion of them, are distributed to and among employees and, if so, the manner in which they are distributed and the amounts so distributed. Section 4D also allows me, as Minister, to make regulations regarding the information that must be contained in a tips and gratuities notice and the way or particular locations at which a tips and gratuities notice must be displayed. This includes a website or other online digital platform hosted by the employer or at the place of business at which employees perform their work or service.

A new section 4E requires prescribed persons to display a contract workers tips and gratuities notice stating whether tips or gratuities are distributed to and among contract workers, the manner in which they are distributed and the amounts so distributed, and whether services charges, or any portion of them, are distributed to and among contract workers and, if so, the manner in which they are distributed and the amounts so distributed. For example, this would cover businesses that contract with platform workers who are not direct employees but whose work typically attracts tips and gratuities. Section 4E also allows me, as Minister, to make regulations regarding the information that must be contained in a contract workers tips and gratuities notice and the way or particular locations at which a tips and gratuities notice must be displayed. For the purposes of section 4E, "contract worker" is defined as 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.

Section 4 provides for an amendment to section 6 of the Payment of Wages Act 1991 that will provide for an adjudication officer of the WRC to direct an employer to repay any unlawful deduction of tips or gratuities arising from a complaint.

Section 5 provides for an amendment to section 3 of the Terms of Employment (Information) Act 1994. This means that a statement regarding the employer’s policy on the way tips or gratuities and mandatory service charges are treated will become part of the core terms that a new employee is to be furnished with within five days of commencing employment.

Sections 6, 7 and 8 deal with enforcement and compliance issues and provide for the relevant amendments to be made to the Workplace Relations Act of 2015. This enables and authorises the WRC to carry out inspections and to take complaints regarding compliance with the new requirements set out in this Act.

Section 9 relates to the Short Title, commencement, and collective citation of the Act.

Most employers do their best to ensure tips are distributed fairly among their staff.

The aim of this Bill is to make sure that is the case across the board, giving employees a new legal right that currently does not exist.

Most customers are unsure where their tips go and of the difference between a tip and a service charge. From now on, establishments will be required to show clearly how everything is distributed and where it goes. This goes for whether the customer pays by cash or card. An important requirement of the new Bill is that an employer must provide a statement to workers showing the value of electronic tips obtained in a period and the portion paid to the individual employee for that period. This will ensure transparency for workers.

This Bill provides for one of five new workers' rights that the Government is introducing this year. We are determined to make better working conditions a legacy of the pandemic and the Government. I firmly believe this is necessary if we are to recruit and retain the staff we will need to drive our enterprise economy forward. We will, of course, be sensitive to issues such as cost and competitiveness and the needs of small businesses.

The Bill will improve the rights and entitlements of workers, particularly lower-paid workers, in addition to providing transparency for customers.

I commend the Bill to the House. I look forward to hearing Members' contributions.

Senator Garret Ahearn

I am sharing my time with Senator Doherty.

I welcome the Tánaiste to the Chamber and I welcome the Bill. I acknowledge Senator Doherty's previous role, as Minister responsible for employment affairs, and her role in bringing this Bill to a certain stage.

There has always been confusion over tips. I was examining some of the main issues that hospitality workers spoke about in respect of dealing with tips with employers. Some workers do not even receive tips; for others, tips are regarded as part of their pay. I worked in bars and restaurants in the hospitality industry for more than ten years and noted there was always a different policy on tips no matter where I worked. In some places, the bar or restaurant staff took them, and in others they were shared by chefs or management. In my time, there always seemed to be a different policy for every place of employment in the hospitality sector. As the Tánaiste said, this Bill is about bringing transparency. It is important to support employees.

The Tánaiste spoke about the four main aims of the Bill: to prohibit employers from using tips and gratuities to "make up" rates of pay; to provide a legal entitlement for workers to receive tips and gratuities paid in electronic form; to ensure an employer may not retain any share of tips received electronically; and to require businesses to clearly display their policy on how tips, gratuities and mandatory service charges are distributed. Ultimately, as he said, there are good employers who go above and beyond in supporting staff with tips and who, based on my experience, actually add to them in some instances as a token of appreciation, and there are employers who do not do that, unfortunately.

One of the main points is the transparency the legislation affords. The Tánaiste spoke about it in respect of service charges. Only a few days ago, I was out for a meal and, because there was a table of six, there was a service charge of 10%. When paying, we were asking whether a tip should be left. Some people felt the service charge was a tip, while others felt the service charge was not necessarily a tip. This Bill brings clarity in that regard, which is important because, as we all know, service charges in certain establishments are not necessarily tips that go to the employees. We often see customers waiting to find a person who offered them excellent service to tip them because they are unsure whether their tip will go to that person if it is left on the table. Therefore, having a Bill like this is important.

The facility to give tips electronically will be used more and more, especially after Covid, because people have become so used to it. While I realise there is a difficulty in giving electronically paid tips to the employee rather than the employer, I would look for some sort of solution to this, in particular.

As the Tánaiste stated, this Bill is about protecting employees. The current and previous Governments introduced a range of measures in this regard. It raised the minimum wage and offered supports during Covid. It is to provide for a right to request remote working. The sick pay legislation that will come through this year will also support employees, which is really important. The Bill under discussion is another facet to that, which is welcome.

Senator Regina Doherty

I thank Senator Ahern for sharing his time because I am an interloper today. I thank the Tánaiste for introducing this Bill. I was involved in it when I was Minister. The Tánaiste is well aware that when Governments fall, priorities are not always the same for the following Minister, who may have a different agenda. I am grateful that he followed through on this. The past couple of years have been horrendous for the hospitality and service industries. The timing is very appropriate.

There is an old saying that all politics is personal. The reason this Bill is so personal for me was that I met some of the people making complaints about their employers. The Tánaiste is right to point out that it is usually only a small number of employers who abuse the trust of their employees. The latter were treated appallingly. We have many really good employers in the main, but when employers are bad, they really are bad. The employees I met were just so lovely, genuine and hard-working. They actually enjoyed working in their industry. Not only is it a very people-oriented industry but, because of the tips, it can also have benefits. Owing to tips, people can train, be in education or spend time at home with their children while still working and earning a decent living. However, when the trust is eroded, it can feel really personal.

There are one or two aspects of the Bill that I believe are really important. Knowledge is key in that power is given to the patron when he or she knows exactly what the tips policy is. It is important that the policy be displayed prominently in a way that makes it clear to every patron. Thus, patrons will know exactly where their money is going and will be in control. If there is any doubt about a service charge or a percentage of a tip going somewhere they do not want it to go to, they can use their feet and pay cash directly to the person they want it to go to. Therefore, displaying the policy is really important.

As Senator Ahearn said, I am aware the Tánaiste would have liked to do something about service charges. Maybe it should be explored further. Again, knowledge is important in that if somebody is aware that the service charge is going entirely to the establishment, but not the staff, he or she can decide how to or whether to tip.

I am fully supportive of 99% of the Bill. There is one aspect I ask the Tánaiste to consider amending, if he does not mind. It is the proposed section 4B. When people tip these days by using their card, the transaction has to go through the till system. Very few employers declare tips and pay tax on them. They do a cash-out at the end of the night or week and the tips are then distributed according to establishment policy. I would like the Tánaiste to take the control away from the employer. In the proposed section 4B, it is outlined that when an employer is changing the policy, he or she must consult the employees. The employer should not have to consult; he or she should have to obtain consent. Ultimately, if I go into an establishment and leave €5, €25 or another amount behind, it is because I will have appreciated the good service. In many cases, I will not mind whether 75% goes to the young lady or man who has served me and 25% goes to the people who have cooked the meal; it is up to them to work it out. However, it is certainly not something that should be controlled by the employer. He or she should, under the policy, have the consent of those who are working hard and earning the tips daily.

I thank the Tánaiste for introducing this Bill. It will mean an awful lot to the people who work in and support the industry.

An Leas-Chathaoirleach

I thank the Senator, including for her impeccable timing.

Senator Gerard P. Craughwell

The Tánaiste is very welcome to the House. Listening to the conversation so far this afternoon brings back memories of my first job in the Castle Inn in Galway, which is now long gone.

At the age of 13, my wages were £2 and my chances each week. Those chances were how much I could earn in tips, and it was necessary to work myself to the bone to ensure that I got the maximum for the night. This Bill is welcome. Before I get into the legislation itself, I thank former Senator Trevor Ó Clochartaigh and Senator Gavan who introduced it. Senator Doherty was probably the finest Minister for Social Protection that we had at the start of this pandemic. That is not to take away from the current Minister. When then Deputy Doherty was the Minister, however, she certainly grabbed the nation’s spirit in the way in which she took on the issues which faced families that were in real stress at the time.

I approached the Tánaiste some years ago about class K PRSI contributions and he immediately acted on the issue for city and county councillors and changed them to class S contributions instead. It is regrettable that we did not do that for sitting Members of this House. Some who lost their seats in the last election have suffered real poverty because of not having social protection contributions.

Returning to the Bill, tipping is an important social act. It is the way in which we can acknowledge the excellence of those who serve and look after us. It motivates people to work that little bit harder and, very often, waiting staff and people working in garages, or wherever, go beyond the ordinary to deliver the best possible service. Workers will welcome the clarity that this legislation on tips will bring. Tips are a crucial part of many people’s earnings. Senator Doherty and other speakers have made that point.

The bottom line here is that wages tend to be fairly poor in the service industry but tips make the difference. Workers who work hard are entitled to their tips. Covid-19 has greatly affected employers and employees in the hospitality and tourism industry. In fairness to the Government of which the Tánaiste is a member, it has worked hard to ensure that it supported those industries through the worst of times. Generally speaking, the public are very grateful for what was done. In years to come, history will reward the Tánaiste for the work done. During the time he was running a temporary or skeleton Government between the election and the formation of this Government, he took some brave decisions and I acknowledge that.

This legislation is well timed as the hospitality, transport and tourism sectors are returning. I hope it will entice workers to go back into those sectors. On a recent trip to my home town in Galway, I noticed the difficulty in finding chefs. Many of them left the industry during the pandemic and they have not returned. I hope we will now see some of them return to the industry. This brings me to the subject of the distribution of tips. It is important that backroom staff are looked after as well as those out front of house. My colleague, Senator McDowell, said to me the other day that if someone serves him well and he wants to hand him or her €20, then he does not want that person to have to hand in that tip anywhere. He wants to be able to give the €20 to him or her. That type of context is provided for in this legislation and that is a good thing.

Turning to the issue of electronic payments, it would be great if we could guarantee that when tips are paid and distributed to people in this way that they will at no stage ever form part of PAYE, USC or PRSI contributions. I agree with Senator Doherty about the service charge issue, and the Tánaiste will investigate this issue, judging from what he said. When employees come together to look at their tips, it is important that they explore a fair distribution of that money among themselves. It is not fair, for example, if employees on permanent contracts take all the tips and the casually-employed people do not get a share. This aspect must be negotiated by the employees themselves.

This Bill will provide a healthier and fairer working environment. I welcome almost everything in the legislation. We may have one or two small amendments as we consider it. From the employers' standpoint, I would like to see a way in which we could audit tips paid electronically to ensure they are all being transferred to the employees. I do not know if such a measure would fit into the legislation now, but I will take the Tánaiste’s direction on this point.

I am delighted to see that the Workplace Relations Commission, WRC, is being involved in this legislation. From my experience in the trade union movement, however, and I am sure other speakers will agree with me, the WRC is already overburdened. If we are going to ask that body to be a party to this legislation, then it should be provided with the resources it will need to adjudicate in this context.

In my two interactions with the Tánaiste here, and I think we have only interacted twice in this House regarding legislation, he has shown that he is always willing to listen. This is a good move on his part. I compliment him on the employment figures, which are looking good, and the economy looks like it could come back fairly strong in the months to come. I congratulate the Tánaiste and the Government on that. The Tánaiste should not worry, though, because a chance will come in future for me to have a lash at him for something else. Credit must be given where credit is due, however. I thank the Tánaiste for coming to the House.

An Leas-Chathaoirleach

I thank Senator Craughwell. I can only assume that he was extremely successful at collecting tips at the Castle Inn.

Senator Ollie Crowe

I welcome the Tánaiste. I acknowledge Senators Doherty and Gavan, and former Senator Ó Clochartaigh, my own county man, for the work they did before the Government brought forward this legislation. I welcome the Bill, in the main, because it will provide certainty for workers. Most hospitality businesses in west Galway have almost always treated their employees well and divided tips fairly. On occasion, there have been incidents where that has not been the case, but it has been a minority of businesses that have not followed the tradition. When the tips campaign was at its height during the last 18 months, I noticed that most employers in Galway city fully supported it.

From my experience, tips create trust between the employee and the employer, and that naturally leads to longer employment and to people working in places for several years and beyond. This is an important factor, because if there is trust between the employee and the employer, then at least progress is being made. Ultimately, the customer will feel that employees are doing their jobs and feel more comfortable. This creates certainty.

The legislation will also provide greater certainty for customers as it will require businesses to display their cash and credit tipping policies in a prominent place. Customers who choose to tip should be entitled to know where those tips will go, and this Bill will provide that certainty. It is particularly welcome that this Bill will give employees a legal entitlement to receive tips and gratuities paid in electronic form, with the provision that these tips and gratuities should be paid to workers in a fair, transparent and equitable manner. Fair and equitable distribution will be context-specific and is likely to consider factors such as staff hours, value of sales income, revenue generated, workers' role in service delivery and whether employees have full-time or part-time contracts of employment, as Senator Craughwell referred to earlier.

Again, most businesses were already dividing tips in a fair manner, but the small numbers that were not have attracted considerable coverage in recent years. That has had a negative impact on workers. People want to tip for good service, but they are reluctant to do so because they are not confident that tips paid electronically will end up with the employees. Many people working in the hospitality industry are eager to see this Bill passed because they believe it will impact considerably on the tips that customers will choose to give when there is full transparency regarding how such tips will be distributed. In many cases, the €30, €40 or €50 made each evening is vital for people’s living arrangements and pays for the reasonable quality of life that people deserve. This legislation will also improve people's motivation to work in the hospitality sector. That is an important aspect.

This legislation is supported by all business owners with whom I have spoken. I can honestly say that is the case in Galway city. The Restaurants Association of Ireland has made public its support for the Bill and its eagerness to see the legislation implemented as quickly as possible.

In recent years cash has become a less common method of paying and Covid-19 has further sped up that trend. The payment of tips and gratuities by electronic means, in contrast with cash tips that are paid directly to the worker, means that the employer is in control of how tips and gratuities are distributed. The electronic record generated by this payment method will support and facilitate inspections by the WRC in the event of a complaint being made. That is significant and important because it means that should any establishment not follow the guidelines set out in this Bill, workers will have the ability to raise it with the WRC, which will then have the capacity to carry out an investigation. Certainly, the WRC might need further support and an increase in numbers.

I believe this legislation will ensure a very high compliance rate across businesses in general. The transparency that businesses will be required to show their employees, under this Bill, is also significant in my opinion. To add transparency to the distribution of tips, the Bill provides that an employer must distribute the tips no later than ten days - I believe it should be within a week - from the date on which the tips and gratuities are paid. From my own experience in Galway, the normal procedure is that tips are distributed at the end of the night and on a nightly basis. I believe it should be done on a nightly basis or at the very least when wages are paid on a Thursday or Friday night in normal bars, restaurants and hotels. To aid transparency, the Bill also provides that an employee will receive a statement in writing that specifies the total amount of tips and gratuities distributed by the employer for the period to which the statement relates, and the amount of tips and gratuities distributed to the employee to whom the statement is provided.

Again, it is better for the longevity of a business and better for the people who work in that business that there is good trust between the employee and employer, which will naturally happen if there is fairness and equity. I can honestly say that vast majority of businesses in Galway appear to give tips to staff. It is correct to say that a better quality of staff leads to a better run business. When one has a quality chef, quality front-of-house manager and quality waiting staff, one's business is on the right road. As a business operator I know that if one respects people and builds trust with them, one will get there.

In the last 18 months the hospitality sector has suffered more than any sector. During that time I have noticed the kindness and generosity shown by customers when there was table service only. Possibly in bars and some restaurants at lunchtime people might not leave a tip but they certainly had more respect for staff, and appreciated the conditions under which they had to work. This Bill clarifies that there is an onus and responsibility on the employer, which is welcome.

To finish, the Bill will vastly enhance transparency for both workers and customers in the hospitality sector. It greatly enhances the legal rights of workers with regard to tips. It will make no impact on the vast majority of businesses, to which the Tánaiste alluded. As I know at first hand, there is no extra cost for business owners who already distribute tips in a fair and balanced manner. The Bill is a significant improvement to the status quo and I greatly welcome it. I hope it can be implemented with as much speed as possible, and certainly before the summer period, which as all Members of the House are aware is the peak of the year in terms of hospitality.

Senator Róisín Garvey

Cuirim fáilte romhat, a Leas-Chathaoirligh, and happy St. Brigid's Day. It is good that we are springing into action on this very important Bill. I welcome the work that the Tánaiste has done on this legislation.

I agree with the phrase that once a waitress, always a waitress. Even now when I eat out with people I cannot help stacking the plates and wiping the table. I have worked as a waitress in Germany, America and Ireland, and waitressing has gotten me through certain stages of my life. I always remember the buzz when someone bothered to leave a tip or appreciated my work and acknowledged my existence as a person, opposed to some kind of a removed thing who serves customers. For that reason, I think tips play a huge part in showing respect for the service industry. The industry in Ireland has suffered in some ways. It is not easy to recruit people. This Bill will give new confidence to the whole service industry because there was a lot of bad press when a small number of employers did not share tips. I remember joining a picket line a few years ago at a restaurant located not very far from here because I discovered that the staff did not get their tips. I joined because as a waitress I understood how the staff felt. This is a really positive Bill in that context.

I live in north Clare. It is a beautiful place so we have lots of visitors and lots of great cafés. Many people I know, including friends of mine, work in the service industry as waiters and waitresses. I am sure that there is a better term now to describe their work but they serve people at tables. I think the legislation is great because it is hard to find people to do such work. As Senator Crowe alluded to, if there is a new confidence in the industry, that might help to stabilise the situation because staff come and go. One of the problems with the tipping system, especially with the greater use of cards, is that many customers do not have confidence that their money will go to the person who impressed them by providing a quality service.

The Bill provides four main changes. For other people who are not here today, the Bill will give employees a legal entitlement to receive tips and gratuities paid by card; oblige employers to prominently display their policy, which is important as it will give confidence to customers that the employers will distribute the cash and card tips; and oblige employers to fairly distribute tips. This legislation will not affect businesses where tips are managed by employees, which is also very important because that is often the case. Employers are often happy to let their employees figure out tips between them and I think that is called the tronc system.

The Bill will assist anyone who is on a low income. Even though tipping is more of an American thing, it has become more prevalent here. People who do their job well in the service industry deserve a tip, if one feels like giving it to them. Waiting staff are often the lowest income earners in the country. Tips can make such a difference to you if you are on a low income. A good tip at the end of the night can really put you in better form, especially if you might not have done a good job that day. If tips are spread evenly, everyone benefits, which is really important.

The Economic and Social Research Institute, ESRI, published a paper in 2020 on minimum wage policy in Ireland. It found that 8% of employees are on the minimum wage and half of them work in the services sector. So it is really good that we are looking at that. I hope that the quality of life of these people will improve if customers feel more confident to give them tips and that employers will ensure their staff get tips.

The Bill will help to tackle the gender pay gap because a lot more women work in the sector than men. I do not know why that is the case because women are not born with an extra skill in how to set and clear tables. That is just the way it is in a patriarchal society, but you have that with lots of other things.

The people who work in the service industry have had some of the riskiest jobs during the pandemic. They have been on the front line in terms of hospitality and it is right that they should be fairly compensated for their work. It is right that people who leave tips in restaurants know that their money goes to staff, which is what most people believe happens when they leave a tip. I am still a cash kind of girl and it is only since I came to Dublin that I have started to use cards more often. I always feel confident leaving my cash behind me on a table but I do not always have confidence leaving a gratuity on the machine. Plus, I forget to tip because I am not used to using a card in that way and I am used to putting the money on the table.

This legislation is an important step in implementing a living wage and tackling costs of living because a lot of low-income earners are waiters and waitresses. The Bill is an important step in moving towards a living wage. The current minimum wage in Ireland is €10.50 per hour. We have made a commitment in the programme for Government to progress to a living wage over the lifetime of the Government. It is important that we address this and also the high costs that families face, including high rent and childcare costs. The Government is committed to doing this. I want to particularly note the work being done on this by my colleague the Minister, Deputy O'Gorman, whom I know has worked with the Tánaiste. The Minister is transforming the childcare model in Ireland, which will see services increasingly publicly funded and publicly managed.

I note that the Low Pay Commission is due to report back to the Tánaiste on progressing towards a living wage and I thank him for his work on that. I ask him to update us on the timeline and content of the report.

When this Bill is passed, will we do a proper public campaign to ensure all employers and employees become aware of the legislation and are fully informed? I do not know whether we should use billboards for that. I know we can write to every business but they get letters from everybody on everything. When the Bill is passed, it would be good to ensure the information is out there because I remember what it was like when I was a young waitress. I remember getting to the end of a hard working day and knowing that I had done a really good job but getting very few tips or none. I did not have the confidence to ask my employer where the tips were. I realise that there is still a small group in the sector who may not be assertive enough to ask for their tips.

I was quite an assertive 17-year-old, but I was not assertive enough to ask for my tips. It is really good that workers have become aware of this issue.

This is a really important Bill because it affects the lives of the more vulnerable in society. It is important that if it is passed, there will be a proper public relations campaign in respect of it to inform the few employers who are not dealing with this issue properly and to ensure the few employees who are not asking for their tips know they have a right to them once the Bill is passed. I thank the Tánaiste for this very positive Bill.

Senator Paul Gavan

The Tánaiste is very welcome. It is nice to see him and it is nice to see the Bill. I welcome it on behalf of Sinn Féin. Some of us have been on a long campaign journey in respect of this issue. Today is an important day on that journey and I wish to acknowledge in particular my colleagues in the trade union movement, the One Galway movement, SIPTU, Mandate and Unite who have campaigned tirelessly on this issue for many years. I, along with my Sinn Féin colleagues, was very proud to present a Bill on this very issue alongside our trade union brothers and sisters back in 2017. That Bill subsequently passed all Stages in the Seanad despite the opposition of Fine Gael but, more important, it kicked off a national conversation about tips and the importance of legislating for the protection of employee tips. Since then, there has been consistent further campaigning by the trade union movement. The Tánaiste's Department has had important engagements with it on this issue which I welcome. I particularly welcome the recognition of the work done by Dr. Deirdre Curran of NUI Galway. She has been a tireless campaigner for employee rights across the hospitality sector and on this issue. The Bill is very welcome.

A significant amount of research has been done. Sinn Féin research carried out in 2016 indicated that one in three workers in hospitality were not getting their tips. The research by Dr. Curran suggested that figure was one in four. More recent research undertaken by Unite suggests the figure may be closer to 50%. I acknowledge, as have other Senators, that the majority of employers in the sector are very good. Senator Crowe is correct - one builds trust with employees by playing honestly and fairly with them in terms of tips and how they are distributed. Let us be clear that there is a problem, however. The research indicates there has been a problem in this sector for some time and it needs to be dealt with.

I acknowledge the Bill does several important things. It places tips and gratuities outside the scope of a person's contractual wages, ensuring that tips cannot be used to top up a worker's wage. This is important and very welcome. The obligation on employers to display prominently their policy on the distribution of cash and electronic tips is also worthwhile. The clear obligation on employers to distribute all electronic tips is welcome. As the Tánaiste mentioned, that seems to be the way payments are going in the sector.

Crucially, the Bill will establish a right of redress for employees. This is why I started the Sinn Féin Bill in the first place. I came across an employee in Limerick whose restaurant manager and business owner taunted her at nights, taking the tips of €5 and €10 and saying, "My restaurant, my tips", before walking away. I wanted to bring a case to the Workplace Relations Commission on her behalf but, of course, I found there was no right of redress. The good news in the context of the Bill is there is now a right of redress in respect of electronic payments. That does not seem to be the case in respect of cash payments. I may be wrong, but that is how I am reading the Bill. I take the point made by the Tánaiste that it is more complicated but I still think something should be done in this regard because, to take the example I have just given, even after the Bill is passed, the woman to whom I referred will have no right of redress for those cash tips. We should try to ensure there is a right of redress not just for electronic tips, but cash tips also. That would be a good improvement to the Bill.

I acknowledge the fact that the Tánaiste stated he will work with us on amendments. I know he gave the same message to the Unite union in particular just two weeks ago. I welcome that and we will work with him positively to strengthen the Bill.

My biggest concern relates to service charges. One of the five stated purposes of the Bill is to "leave the status quo in relation to mandatory service charges forming part of the revenue of a business". I have a problem with this. Service charges should not form part of the revenue of a business. To digress momentarily, I discovered just last week how service charges came about in Ireland. They came about as a result of a strike in hotels in Dublin that went on for several months in 1951. The solution to that strike was a collective agreement between unions and hotels to introduce a service charge. The service charge would be owned by the employees through the trade unions and distributed through the trade unions. That is how service charges came about. They were to ensure justice and better pay for workers in hotels in Dublin.

As Dr. Deirdre Curran asked in an article published last week, "When did it become accepted there that service charges are the prerogative of the employer and why?" I welcome the indication by the Tánaiste that he has asked his officials to consider an amendment that would also prohibit the use of mandatory service charges to make up wages and would require that such service charges go to staff as income. That is what needs to happen because, as the Tánaiste stated, when people go to restaurants and see a service charge, they make the assumption that it is going to the workers and they will probably not give a tip on top of it. Bearing in mind from where service charges in this country come, let us do what is right by the workers. I hope the Tánaiste will work positively with us in that regard. Sinn Féin will be bringing forward an amendment on this issue but we are keen to work constructively with the Tánaiste in respect of that particular issue.

In my final couple of minutes, I wish to clarify another point. I think the Tánaiste was saying in his speech that, basically, optional service charges and discretionary service charges are now being deemed to be the same as tips and gratuities. If that is correct, it is a very welcome clarification because that was another concern the unions raised with me.

The final point I wish to make is in the broader context of the industry. The Tánaiste will be aware that in 2008 the joint labour committee, JLC, system for the hospitality sector was struck down by employers. That was a significant blow to workers in the industry because that system did not just establish tiered rates of pay such that one could look forward to a career in the industry, it also dealt with issues such as paid breaks, overtime rates, Sunday premiums, holiday entitlements and sick pay. These were laws that protected low-paid and sweated labour and predated the foundation of the State. It was a significant blow to have those laws struck down by the High Court.

It was a colleague of the Tánaiste, Deputy Bruton, who reinstated legislation for JLCs in 2012. Here is the difficulty, however. For ten years now, employer groups in the hospitality sector have refused to engage with that process. We are coming out of a pandemic and a phrase all present like to use - I think we all mean it - is that we want to build back better. We will not build back better if we do not reinstate a floor of decency across the sector in terms of minimum conditions and standards agreed through negotiation with the trade union movement. The Government has rightly given a range of supports to keep the hospitality sector going through the pandemic. Is it really too much to ask that, in return for those supports, the employer groups sit down with trade unions and re-establish a JLC? To me, it was shocking to learn that workers in hotels could avail of sick pay back in the early 2000s but they have no chance of doing so at the moment. At that time, they could have a decent Sunday premium. Some Sunday premiums now amount to 15 cent. It used to be negotiated and agreed.

These points are important in the context of ensuring people can make a decent living in the sector. There is a wider context here. The Bill is an important step forward. Sinn Féin acknowledges that and will work with the Tánaiste but we need to address the elephant in the room. Some 43% of low-paid workers work in hospitality, retail and wholesale. We need to ensure a better future for them so that people can look forward to a career in those sectors. That will not come about without proper engagement and negotiation. It is regrettable but true that it is the hotel employers sector in particular that has resisted that. I ask the Government to address that issue.

Senator Marie Sherlock

The Tánaiste is very welcome to the House. I pay tribute to the work of the One Galway and One Cork movement, which did a significant amount of campaigning and work to bring this issue to national attention. I pay tribute also to the work of Senator Gavan and his colleagues who introduced the National Minimum Wage (Protection of Employee Tips) Bill back in 2017. When the campaign commenced then, I was struck by just how much of a chord it struck with so many people. People were justifiably dismayed that an employer would ever deprive workers of the tips intended for staff. In that context, I very much welcome the spirit of the legislation. It says something that we need to have legislation such as this to clarify that tips clearly given for the benefit of workers actually are the property of workers.

In welcoming the spirit of the legislation, we have to ask a number of questions as to why certain decisions were taken in drafting it. This Bill has had the benefit of pre-legislative scrutiny by the Joint Committee on Enterprise, Trade and Employment, but I wish to raise two concerns that have been touched upon, the first of which is the treatment of the service charge and the distinction between the definitions of "mandatory" and "voluntary". As the Tánaiste noted, the public would be horrified to know that service charges are not contained within the definition of a tip or gratuity. For years, we have been duped into thinking we were paying something extra towards the service and not for the service itself. This point raises the issue of the power of employers within the hospitality sector in particular in lobbying the Government to exclude service charges from this Bill. In the 2017 Bill, service charges were to be recognised as part of a tip, but they are being excluded in this legislation. I am taken by Dr. Deirdre Curran's suggestion that, if service charges are not to be included, they should be relabelled as an additional employer charge. If this Bill is intent on bringing legal certainty for workers and transparency for customers, something needs to be done to highlight to customers that the service charge is just another item on the bill. The Tánaiste stated he was open to amendments. We need to be clear on whether a service charge is something that goes to the employer or is intended for the worker without it being part of his or her taxable income, which is the crucial element.

My second concern has to do with the enforceability of this legislation. Legislation is only as good as the enforcement procedures that are in place. We were supportive of the original Bill's intent to make the withholding of a tip by an employer liable to criminal sanction. Since that provision is also in place under the Payment of Wages Act 1991, I am unsure as to why the same standard does not apply in this amendment to that Act.

While I welcome the spirit of the Bill, we must be careful not to overstate the importance of a Bill like this. Some Senators have spoken about the extent to which tips form part of the income a worker needs to cover his or her living costs or how they should be seen as something to help manage or mitigate the gender pay gap in workplaces. Senator Garvey is right in that the workforce in certain parts of the hospitality and service sectors is predominantly female. The key issue is the extent to which the Bill will address the gender pay gap and, as the Tánaiste mentioned, help the tourism and hospitality sectors to be seen as valued and sustainable career choices. While workers in the service sectors will appreciate the efforts being made in this Bill, the real question is what the Government is doing as regards their wages. The confiscation of tips is insult added to the injury of low pay. We need to hear the Tánaiste's plans for improving pay and conditions in these sectors. He has spoken about the five key plans as regards workers' rights, which is welcome, but if this Bill is the height of the Government's efforts, it will be exposed as tokenism and a failure to address the real injury, which is persistent and exploitative low pay in many parts of the hospitality sector.

It is striking that employers are complaining of labour shortages in many parts of the economy. In one of the Sunday newspapers, there was a feature article with three hoteliers who talked about wanting to offer health insurance, yoga and other perks, yet only one of them spoke about wanting to improve pay. That hotelier said the sector would be on a "journey" over the next number of years to try to bring its staff to a living wage. We need to understand what a living wage is. It is defined not as a decent standard of living but as the minimum essential standard of living. For a hotelier with a five-star hotel to say the sector was going to take a number of years to get to that point says a great deal about the mentality of many employers within the hospitality sector.

As the Minister for Enterprise, Trade and Employment, the Tánaiste is in a unique position to bring employers and trade unions together. Senator Gavan spoke about the collapse of the joint labour committees, JLCs, and the legislation to reinstate that system. Interestingly, when the then Government commissioned a report from a former vice chairperson of the Labour Court to determine the appropriate sectors for a JLC, hospitality was identified as one. Hospitality remains one of a number of sectors that still do not have a JLC because of the intransigence and blatant opposition of employers to engaging with workers and worker representatives in a fashion that can set out sustainable terms and conditions. We want this sector to thrive and survive, but we also want to ensure workers can earn a decent standard of living.

I welcome the spirit of the Bill but there is much more we must hear from the Tánaiste about his plans in respect of low pay. On average, a hospitality worker earns 47% of the average wage.

Culturally, not everyone in this country pays tips. In the United States, it is part and parcel of what people pay when they go to a café or restaurant, but that is not the case in this country, so we must be careful not to overstate the importance of tips as a part of people's income.

Senator Paul Gavan

Well said.

Senator Frances Black

I welcome the Tánaiste. I am pleased to see this legislation being debated in the Chamber. I thank the Tánaiste and his Department for their work on this matter. I commend Senator Gavan, who introduced the National Minimum Wage (Protection of Employee Tips) Bill 2017. It laid the groundwork for the Government's legislation.

The restaurant industry and the wider hospitality sector have undoubtedly had a challenging time over the past couple of years. We saw unprecedented levels of unemployment in the sector, with a large number of people choosing to leave it and the closure of many small independent businesses. Despite the continued concern about the pandemic, it has been a relief to see our hospitality industry doing what it does best over the past fortnight. I wish it every success in the early days of the reopening of society.

We sometimes take for granted how important it is to contemporary life in Ireland to be able to sit down in a café, bar or restaurant. The industry provides much more to us than just food or drink. It is a space for community, conversation, relaxation and the stimulation of all of our senses. It provides us with a warm welcome and a space to celebrate life events with friends and family or to sit in a quiet corner and enjoy our own company. It also provides something significant to those it employs, something that is beyond a person's take-home payment.

There is a passage by the late Anthony Bourdain that encapsulates some of the importance of what hospitality provides to us all, not least those working in the industry. I hope it is okay to take the time to quote it. He stated:

You can always tell when a person has worked in a restaurant. There's an empathy ... a special understanding of the way a bunch of motley misfits can be a family. Service industry work develops the "soft skills" recruiters talk about on LinkedIn - discipline, promptness, the ability to absorb criticism, and most important, how to read people like a book. The work is thankless and fun and messy, and the world would be a kinder place if more people tried it. With all due respect to my former professors, I've long believed I gained more knowledge in kitchens, bars, and dining rooms than any college could even hold.

That really stood out to me because I too worked in the hospitality industry when I was a young single mother. It was a very vibrant job to have. Many of us will have a new-found appreciation for the hospitality industry following this pandemic. Appreciation, however, does not pay the bills. Unfortunately, the industry is not always fairly compensated for the contribution it makes to contemporary life. Many jobs in the service industry can be quite precarious and often they are not well paid. The hours can be very taxing and unsociable and are not well suited to parents or people in education or training or for those with caring responsibilities. We need to start attributing more value to the work of the industry and those employed in it.

Obviously, this Bill cannot address all of the insecurities to which I have just referred. I hope it will provide a little bit more security for employees and customers about tips and gratuities, how they are regulated and where they end up. While we need to ensure the basic pay for people employed in the sector is decent, tips and gratuities will continue to be an important addition to the gross income of those employed in the sector. There need to be robust protections in place. It should never be the case that there is uncertainty about where tips end up or how they are divided between the staff team at a café or a restaurant. It should absolutely never be the case that tips received by staff are used to cover their basic wage costs, as has been common practice in a number of high-profile venues in recent years. Tips are given in good faith by customers with the understanding that the tip is distributed to the staff team. That any business leader would mislead his or her customers and mistreat the staff in this way is very disappointing. I welcome the protections the Bill will provide in these circumstances.

I may be confused about this but I am disappointed the legislation does not protect cash tips in the same way as those paid by card. It seems nonsensical to enact this legislation and then to exclude a large portion of tips and gratuities by virtue of how they are paid. The employee has no say in the matter of how the payment is processed. A person who decides to pay with cash should not be disincentivised from doing so. We are living in an increasingly cashless society, but both cash and card payments should be treated the same in the context of this legislation.

I would like to see the legislation include more robust guidelines for service charges that are applied automatically to a bill at the end of a meal. Many people, when they go to a café or restaurant, believe they are paying a tip when a mandatory service charge is applied. While I appreciate the Bill stipulates that businesses must display their policy and practice in respect of service charges, surely it still misleads paying customers to suggest that the advertised price of the meal does not match their bill at the end.

Additionally in my reading of the Bill, it does not stipulate that policies around optional service charges ought to be displayed in a transparent way by a business. Many service charges are levied at the discretion of the bill payer. Again, people perceive the payment of a discretionary service charge as being the equivalent of leaving a tip for a staff team. While many businesses do distribute the takings for service charges to their employees, we should not give space for an anomaly to exist in this way between those businesses that apply mandatory charges over discretionary service charges.

I reiterate my broad support for this Bill and its contents, and I look forward to working with my colleagues in the weeks ahead in the House to make the legislation as strong as it can be for the customers and employees of the service and hospitality industry.

Senator Fiona O'Loughlin

The Tánaiste is very welcome to the Seanad. This is very important legislation that will bring about a fairer system. I welcome the fact it is employee led, there is transparency at the heart of it, and there has to be consultation with employees in any working environment with regard to the policy that will be adopted by the employer.

The Bill is certainly very much welcome. It gives workers legal protection over tips. This means the tips received cannot be counted towards an employee's basic pay and the tips must be additional and separate. While the vast majority of employers are very fair when it comes to dealing with tips, unfortunately, there is always the minority where there have been problems. Some of those have featured in the media in the past for not having fair policies. People spoke with their feet in terms of what they thought of that.

Providing clarity on the meaning of tips, gratuities and service charges is very important, as is obliging employers to display prominently their policy on the distribution of cash and card tips. It can lead to confusion, particularly when people are paying by card, as to whether the tip can be included. It is important to oblige employers to distribute in a fair, equitable, and in a transparent manner the tips that are received in electronic form, either through smartphones or cards.

A key provision of the new law will give employees a legal entitlement to receive tips and gratuities in a fair, transparent and equitable manner. It also must be context-specific and take into account matters such as staff hours, value of sales income or revenue generated, and the worker's role in service delivery. It is fair the employer can take into account certain factors when deciding how to distribute tips, including seniority or experience of employees, the number of hours worked and so on. Key to all of this is the fact the employees must be consulted on the policy that is going to be introduced before it is signed off.

How cash tips are distributed will be required to be included, along with the management of the tips and gratuities, in the employer's publicly displayed policy. It is very important that all tips must be distributed fairly and in a transparent way. This is key and central to this Bill. I certainly welcome that.

Senator Aisling Dolan

I welcome the Tánaiste to the House today. We are here to discuss the Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022. I acknowledge in particular the work of the Leader of the House, Senator Doherty, and other Senators on this. I welcome the Tánaiste's and Fine Gael's commitment to protecting workers' rights here. As the Tánaiste has mentioned, this is one of five rights the Government is bringing forward this year. It is timely to discuss this Bill on St. Brigid's day, Imbolc, which is the promise of spring. Many schools will be making their St. Brigid's crosses today, and probably looking for tips. Whether they will get them is another thing.

Among the rights mentioned by the Tánaiste is the right to request remote working. It is crucial, especially in regional areas like Roscommon and east Galway. We have spoken about this recently. The Tánaiste will also be looking at statutory sick pay, extra redundancy rights for people who were laid off during the pandemic and, here before us, the right to protect tips. This legislation means employers will have to pass on tips to employees, and this applies in all sectors, including hospitality, taxi drivers, hairdressers and tour guides. All of these are the sectors that were heavily impacted during the pandemic. Our hospitality and tourism sectors were totally shut down. I also acknowledge the Low Pay Commission and its report on this, and the officials in the Department and their work.

Since our reopening, our hotels and restaurants are full of activity. On Sunday we took my family out. My mum and dad are quite a bit older but it feels safe to bring them out. The place was absolutely full of grandparents, mums, dads and kids, and it was absolutely hopping on a Sunday. To sit down and have dinner and to see that coming back was fantastic.

It is important to us because the time we usually spend with family and friends was gone during lockdown. We need to ensure that we support our industry in getting back on its feet, but one of the key issues, as has been mentioned, is staff shortages in hospitality. We need to examine how we support apprenticeships and encourage employers to take on apprentices. There are supports for employers, such as €2,000 to take on an apprentice and €1,000 if an employer keeps one on after six months.

In the west, An Chistin in Castlerea is a state-of-the-art food training centre for chefs and all types of catering. There is also training available in GMIT and Limerick. Following the campaign I hope will be launched to promote this, we should also highlight the centres of excellence in food training to encourage more people to take on apprentices and the centres of excellence in those areas.

As a student, I worked in restaurants and pubs so I know the importance of tips. As a student, an extra little bit in tips made up for the long hours, sore feet and low wages. It is crucial that we reward people in the industry. We need to ensure that we reward and encourage them, in particular students who have part-time jobs while attending third level. We need a strong and growing industry, and it is important that the Bill protects tips and people working in the sector.

I acknowledge Dr. Deirdre Curran who has done a lot of research on this and has spoken to sectoral reform. Other areas that can be examined and reformed, and this Bill is the start. The Bill will ensure transparency for all employees, in particular in terms of electronic payments, and will oblige an employer to publish a statement for all employees to view. That is extremely welcome.

On service charges, is there a way for it to be made clear on a bill that this is an employers' service charge? Can such a provision be included in the Bill?

Senator Pat Casey

I welcome the Tánaiste to the House, and I welcome the Bill. However, as somebody who has lived his life in the hospitality sector I am disappointed that we have to introduce a piece of legislation for the distribution of what is surely the entitlement of staff to their tips. I am disappointed that it has come to that. A minority of businesses are not distributing tips properly. A majority of us put our staff front and centre because we are a service industry. Without staff, the hospitality sector does not have an industry. Staff are the one key component we need to survive now and into the future, and we must look after them. In my lifetime, I have never at any stage not distributed tips for staff to them.

A lot has been said. Senator Gavan mentioned the JLC. I will speak about my experience of the JLC. Sadly, my father passed away very suddenly and I had to take over our hotel long before I had ever intended to do so. I relied on the JLC. It gave me a framework within which to structure my pay and conditions for staff. I have engaged with the JLC process. Senator Gavan is right in that it provided staff with a structured four-year process whereby they would get a pay increase on an annual basis. The JLC also differentiated between tipping and non-tipping zones, and took account of the fact that while tips are given out at the front the staff at the back might not necessarily get them. There was a compensation factor there. At that time, there was a differentiation between male and female wages, which when we think about it was disgraceful.

As the industry struggles and tries to reopen, we have seen a wholesale exodus of the key core element of the sector, namely staff, pay and conditions will become a vital part of how we try to revitalise our industry. There is a significant labour shortage. We are back to almost 100% employment and we are struggling to get applications for jobs requiring specific skills in the industry. I ask the Tánaiste to immediately examine the work permit and visa process.

Service charges have been mentioned. I have never used them and have never seen the need to. At one stage in the 1990s, there were two service charges in some hotels in Dublin. There was a service charge and then a basic service charge, BSC, which added between 12.5% and 15% to a bill. I welcome the clarity that even when a service charge is operated, businesses have to display how it is distributed or broken down. If nothing else, the Bill is doing that.

The distribution of tips in the industry is a minefield. Let us call a spade a spade. Cash has been mentioned, and I could give the House examples of schemes and processes that have been put in place. We have all left tips under saucers or given them to people behind the counter or staff walking out the door. From an employer point of view, trying to control that is almost impossible.

As an employer, I would love everything to be electronic. I could then physically control how money is distributed. We spent six months in our hotel trying to come up with a scheme that was more transparent and ensured everybody, down to kitchen porters and housemaids, got tips. Tips were proportionate across all staff and were distributed with wages on a weekly basis. By week six of that process, the pool of money had almost disappeared. We went back to the previous situation with cash whereby whoever got cash took it. Dealing with cash is complex, and the Tánaiste referred to that. There is a track record with electronic payments and businesses can manage that process.

The role of Revenue in respect of tips could come back to haunt us down the road. What does the Tánaiste think that role should be? There are electronic records to establish what tips were collected and to whom they have been distributed. We all know that in America the rate is almost 15%. My brother operates a hotel in Washington and has told me that staff never collect their wages because it is used to pay the tax on the tips they receive. We need to know what the understanding of employers will be in respect of tips collected and whether staff will have to pay tax on that money. Staff are entitled to know that.

Senator Mary Seery Kearney

I thank the Tánaiste for bringing this Bill forward. When I saw it I was delighted. I am married to someone who was a representative in the hotel branch of the ITGWU some years ago. When we were dating, there were establishments he would not go to because they used tips to pay wages. The reputational damage that is attached to some establishments in this city is well warranted, and long may they endure that until they prove otherwise and show transparency with regard to their staff.

Tips should never be used to supplement wages. Staff should receive them for exceptional service. While it is not compulsory to pay tips in Ireland, it is a mark of the sheer hard work, special occasion and attendance given by an individual which is warranted. It is a human kindness that is worth more than its monetary value in terms of the value to an individual.

Given the staff shortages in the hospitality sector, this Bill is urgent.

We should consider including in the guidelines the requirement to advertise the tips and gratuities policy. There should be a clear definition of "service charge" within that policy as to how a service charge is distributed, if it is distributed. There was an agreement back in the 1950s to increase staff wages using service charges; that was its origins. However, it may have moved on from that and many employers do not use it accordingly. I am glad to see a criminal sanction element. Depending on the type of employer, it will be more or less effective. I am thinking of sole traders. That would be one thing on which we need a little bit of consideration. The fact it is a mandatory policy will lead to conversations with smaller employers and will bring out into the open how tips are dealt with, which is also a good thing.

There is an element in the legislation providing for how we deal with contractors. That is fine. We have a trend coming into hospitality where staff can be provided from a platform working environment. I have come across that. Many employees in hospitality are also temporary agency workers. Some of them are beyond retirement age and therefore do not have the protections of the Unfair Dismissals Act. They rely on the Protection of Employees (Temporary Agency Work) Act, and within that they have a right to claim commensurate benefits. The definition within that Act is "basic pay and conditions". Certain bonuses have not been included in that while others have. For the purposes of Workplace Relations Commission, WRC, referrals we need to give clear guidance on whether this Bill comes into that definition of basic pay and conditions for temporary agency workers. I believe it should. That is a little tweak that perhaps we should consider at some point. It will work its way out anyway, to be fair, as the WRC engages with the Bill and its outworking.

There was a genuine fear of taxation so I am glad that is clearly defined. There are workers in the industry who talk about going into work with nothing in their pocket and having their few bob going home, so that is welcome. Overall I support the Bill. The temporary agency worker element is important to look at. Otherwise it is very fine legislation.

Senator Lynn Boylan

I welcome the opportunity to participate in the debate. I commend Senator Gavan who really drove this issue in the previous session. Through his work and the work of the trade unions, focus was brought to bear on the hospitality sector, particularly those rogue employers who were withholding tips from employees. There is a need for a broader conversation about what needs to happen and how we have arrived at a point where employees are reliant on tips due to low pay and conditions in the hospitality sector. As others have said, there was a time when tips were a bonus and a way to acknowledge staff who went above and beyond. Unfortunately, in Ireland now, tips are becoming an essential part of workers' salaries. The fluctuation from week to week and month to month is only adding to the precarious nature of the sector and to the stress of the workers. This sector is especially characterised by its young workforce, predominantly female and with a significant number of migrant workers.

It is fair to say we all know there are many excellent employers in the hospitality sector. I worked for one myself on and off in a café on George's Street for years and it put me through college. It was also there for me to fall back on when the crash happened and I lost my job that I had studied for in college. There, the staff had full control over tips. The only role the owner of the business had was at the end of the month to change all the coins that were collected into notes for the staff. I compare that with the more recent experience of somebody who works in my office, which was very different. Their wages were stopped for breakages. They had repeatedly to request the money that was owed to them when they finished working there. Luckily, they kept all the evidence in writing.

We have seen that the restaurants and hospitality lobby has been very vocal. It is very strong and forthright in saying what it wants and it was given lots of airtime, particularly during the pandemic. Too often it is the workers' voices that are not heard. There is some imbalance in this Bill. Maybe that is because we need to hear more from the employees and less so from the employers. That is not to discount the very welcome provisions of the Bill as outlined by others here. There are improvements that need to be made and I hope we can do that through amendments.

One particular concern is the difference in treatment of cash and card payments. I hope that can be resolved. Initially, payment by card was seen as the higher risk for people working in the sector. Certainly as someone who has worked in it, when paying by card I always ask if the staff get the tip if it is put on the card or if it goes to the employer. We cannot now have a situation where, if they are getting a cash tip, they are going to lose the protection. That needs to be fixed.

I welcome that the Bill will make it compulsory for customers to be notified of the policy of the establishment. It is important that the public vote with their feet when we hear about people who do not treat their workers right. I commend the campaign by the trade unions and the Union of Students in Ireland, USI, that highlighted the practices in the Ivy. It is concerning that mandatory service charges can still be imposed and used as an income by the employer. Not only does that lead to confusion for customers about what they are paying, it also reduces the amount of money they have available to leave a tip so that the workers more than likely will lose out.

I welcome the introduction of the Bill. I commend Senator Gavan on getting the ball rolling on this. The present Bill is a welcome next step. I hope the Minister and the Government will work with the Opposition on amendments to achieve what we have heard everybody flagging. There are genuine concerns but most people welcome the fact the Bill is coming forward. Once we get that right we can move on to the more important work of ensuring those in the hospitality sector earn a living wage and have secure working conditions so they can see the sector as a rewarding career choice. The best way to address staff shortages in the sector is to make it a viable career choice for people. We will only do that when we have respect for those who work in hospitality and pay them a living wage.

Senator Eugene Murphy

I am not going to take up all of my time. There is no point repeating a lot that has been said already. This is good legislation. It is part of what the Government is doing on workers' rights. The public is way ahead of us on this. Most people make a serious effort when they are in a restaurant to make sure the staff get their tips. One of the problems that has arisen is that while we are moving more into being a cashless society, people are a bit slow to get the tip added on to their card. It is only beginning to happen now. I have a bit of experience with this. One of our children is still in college and has a holiday job. One has just moved out of that. They noticed that the more it went over to card, the fewer tips they got, but it is beginning to improve now. The vast majority of people who own restaurants or manage hotels are ensuring nowadays the workers get their tips. I am hearing my own children say this nowadays. They say that usually the person on the floor who is in charge is left in charge of the tips, not the owner. The owners in many respects make that decision.

Some very valid points have been made. Everyone in this Chamber wants to ensure people get their tips. I have a massive issue about people not getting their tips.

I do not think we should be painting a picture that we have a massive problem with this nowadays, because we do not. Nevertheless, I acknowledge that where there are shortcomings and where people do not pass on these tips, we need the legislation and we need to deal with it. It is a good Bill. I welcome the fact that Adrian Cummins, head of the Restaurants Association of Ireland has welcomed it and that restaurants will engage and make sure that the practice is carried out in restaurants. I know that most of the restaurants and hotels in my area are treating their staff properly. I agree that it was a different story some years back. I used to get a lot more complaints about this issue ten or 12 years ago, but I am glad to say it is not as big a problem now. By having the statutory element in place, workers will be protected. It is the right way to do business. This has been a very good engagement today and I thank the Tánaiste for being here. Like others, I support what he is trying to do here.

Senator Paddy Burke

I welcome the Tánaiste to the House and wish him well with this Bill. I think Senator Casey raised a very valid point on the question of how Revenue is going to deal with this issue. This Bill is about ensuring tips are not part of staff's wages. The point Senator Casey made is that tips will be part of their wages. Perhaps that is the way Revenue is going to treat it. More than likely, Revenue will stay silent or play dumb for a while on the matter. However, it is a very important question because it could well be that what we are legislating for here today is that tips will be part of the wages of the staff in the hospitality sector. There will be many problems implementing this legislation and adhering to the many guidelines and whatever will be attached to the Bill when it is fully implemented.

I recently spoke to Marvin Baker, who is the CEO of Lightspeed, a sustainability business. Through one of the company's initiatives, restaurant customers can choose to make a donation to offset their carbon footprint and fruit trees will be planted in the developing world. They are fruit trees that will provide food for the people and work in areas where work is badly needed. Through this legislation, we could be well down the road towards a situation where there could be confusion when a client in a restaurant gets the bill, wants to pay a tip and wants to offset some of their carbon footprint. For example, Mr. Baker told me that in the past he found that some of the contributions went missing and he did not get the number of trees that he was supposed to get in a particular month. What happens if that is the case with this legislation? It is going to be a big problem for restaurants, hotels and businesses to keep track of everything, whether it is a tip or a contribution to offset the carbon footprint. The restaurateur might decide that they do not want to introduce a tips or carbon-offsetting policy for their business. They may decide that it is up to customers to decide whether they want to leave a cash tip on the table. Will such an approach be acceptable under this legislation? Will it be acceptable for a proprietor of a restaurant or an hotel to operate in that fashion when they think there is too much work involved in the other way, with too much infighting and too many problems? They may choose to operate a policy with no tips or carbon offsetting. They may decide that it is up to the customer to decide whether they want to leave a tip on the table or contribute to offsetting their carbon footprint, and whatever happens after that it is not the restaurateur's responsibility.

As Senator Murphy said, I wonder how widespread is the discrimination in the existing policy. I was in the hospitality business for quite a number of years and I never heard any complaints, to be quite honest. I also did not hear of any restaurants that were not returning their tips to the staff. There is no doubt about it that there will be problems implementing some aspects of this Bill. For example, what happens if a hotel has a policy of returning tips to staff, a customer decides to leave €20 or €30 on the table and the person coming in to clean the room sticks the €30 into their own pocket? Are they going to be prosecuted? Where does it leave situations like that, when a member of staff does not return the tip that was left and there is a tips policy in place that all tips should be returned? I see from the second page of the explanatory memorandum that consideration will be given to the seniority or experience of the employee, whether they are on a full-time or part-time contract, whether the employee was consulted in relation to the manner of distribution and the role and influence of the employee in providing a service. There will be quite a number of problems in developing the policy that is going to be adhered to, if there is a policy to be adhered to. Perhaps some of those issues can be teased out on Committee Stage. I welcome the legislation. I think it is quite right that all tips should be returned and given to employees. That is who they are meant for and that is who should get them.

Senator Maria Byrne

I welcome the Tánaiste to the House this afternoon and thank him for coming to discuss this important issue. I compliment both Senator Doherty, who brought the Bill forward when she was Minister for Employment Affairs and Social Protection, and other colleagues who have done a lot of work on this Bill. I know that the Tánaiste, as Minister for Enterprise, Trade and Employment, is very committed to improving the lives of workers. I welcome the fact that this legislation is before us here today.

I have been talking and chatting to people and employees working in restaurants. The majority of people I have spoken to are very happy with the set-up within their own places of employment. Certainly, I have found that workers are in receipt of their tips, and in most places, the pot of money is divided among the employees working on a particular night. However, I understand that there are workers who are not in receipt of their tips. Therefore, I think it is very important that this legislation is brought forward.

On the point raised by Senator Casey about the way Revenue will treat electronic tipping, I believe that tips are taxed in the USA and other countries. I would not like to see us going down that route because I believe that when customers give an employee a tip, they give it in good faith for the services they have received. I know that in some places there are service charges and it was thought that a portion of such charges would go towards tips, but not every place has service charges. I suppose it does not affect businesses. I am aware that in some places, when customers are paying by card, an option comes up on the card machine offering them the option to leave a tip. I do not know if that could be introduced right across all card machines or whether it would be a big piece of work. I am sure the machines are programmed by banks when they are provided to the businesses for their use. You see it in some places. It is possibly a reminder for the person who is paying the bill that there is the option to leave a tip. However, I think most people go with the old-fashioned model of leaving the money. During Covid, not all of us had cash in our pockets, so many people moved to the use of cards.

I compliment the Tánaiste on his work in bringing forward this legislation. It is very important that we support the rights of the worker. I compliment the Tánaiste and the Department on all the work that has been done, because times have been very challenging with both Covid and Brexit. I know of the Tánaiste's commitment to both employers and employees. Certainly, we would not be coming out the other side of Covid without the support from his Department so I acknowledge that and thank him. This legislation has my full support.

Acting Chairperson (Senator Róisín Garvey)

I call on the Tánaiste to respond. That was a good debate.

Minister for Enterprise, Trade and Employment (Deputy Leo Varadkar)

I welcome the contributions from Senators and the broad support for this Bill.

When I first decided we would revive and reintroduce it, I actually believed it would be very simple. I thought we would do just two things: make it illegal to use tips to top up wages, bearing in mind that it is already illegal to top up to the minimum wage but not to other contractual rates, and introduce transparency around tips and service charges to make sure they go to the staff and so people will know how they are divvied up. Most people do not know how much goes to the server and how much to the people in the kitchen and so on. I thought it would be that simple but it is not. As is always the case when one tries to legislate, one discovers all the various nuances. One discovers that there are sometimes areas that are best not to legislate for because one can do more harm than good.

Cash tips are generally, but not always, controlled by the staff and do not go through the books. Electronic tips are paid when somebody pays the bill electronically. These, by definition, go through the books. There are now apps, such as TiPJAR and Strikepay, that can be used to pay electronically to a server a tip that does not go through the employer's books. It is a bit like giving somebody money with Revolut. I came across these apps only in the past couple of weeks. There are mandatory service charges and discretionary service charges. While they sound similar, they are very different. A discretionary service charge involves a choice whereas a mandatory one gives no choice. The matter is more complicated than I believed it would be. My sense, and the sense I have heard from Senators this evening, is that we have to strengthen the Bill regarding service charges so it will be clear they are for staff and not additional income for the business. I will return to that a little later.

On Senator Doherty's remarks on the proposed section 4B, we will determine whether we can change the wording so the employer must consult the employees or secure their consent. However, we will have to think about what happens when that is not possible, particularly where there may be a transient or unorganised workforce in a certain business.

On Senator Garvey's questions on the Low Pay Commission report, I have asked the commission to advise the Government on how we would move towards a living wage for Ireland. There are several decisions that will have to be made when I receive the report. I have not got it yet. We are supposed to get it in quarter 2 or in the next couple of months. We may get it at the end of quarter 1, but certainly in quarter 2. A couple of big decisions will have to be made, including on how the wage is calculated, whom it applies to and how it should be phased in.

There is a programme for Government commitment to move towards a living wage for Ireland and to get it done during the course of this Government. I guess that is the sixth workers' right. The seventh is auto-enrolment, in respect of which the objective is to ensure workers in the private sector who do not have an occupational pension have access to one. Half of them do not. If we secure these seven rights in the term of this Government, we will not have done a bad job, but I am not committing to securing rights six and seven this year. I am committing to the first five this year and to the sixth and seventh over the course of the term of the Government.

On Senator Garvey's suggestion to have an information campaign, we will absolutely have to act on that. We will have to run the campaign in different languages and work with various stakeholders to get the information out about the new law, if and when it is enacted.

Senator Gavan was asking about cash tips and transparency regarding them. We will consider this. The advice from the Workplace Relations Commission is that regulating and managing cash tips just would not be workable. Generally speaking, but not always, they are managed by the staff. If there were a right to redress, who would one be seeking it from? It would presumably be from another staff member. It would be new, in my view, for somebody to take a case on tips, with one staff member against another going to the Workplace Relations Commission. It is not something I am ruling out but something we will have to consider. It is complicated. By the nature of the fact that cash is involved, there would not be any evidential trail unless somebody, somehow, had video evidence or there was sworn testimony. Cash tips are very complicated to regulate for, and that is why the Workplace Relations Commission recommended we not do so. However, we will give it some thought and consider amendments if there are any.

On discretionary service charges, Senator Gavan is correct in that they are considered to be tips and gratuities. On mandatory service charges, the view of everyone in this House is that they comprise money that should go to the staff. Most people believe they do but they do not always. That is a problem, so it is a question of whether we can strengthen the legislation on Committee Stage to make it clear that a mandatory service charge should go to the staff. Potentially, there should not be mandatory service charges at all. A service charge is a funny thing, is it not? Most of the time when you receive a service, you pay and there is not 10% on top. In other service industries, such as the hair and beauty industry, I have never come across a service charge. Maybe it happens. It does not in the barbershop, anyway. There are two options: to outlaw mandatory service charges altogether or to be very clear that the money must go to the staff.

I was fascinated to hear about the origin of service charges. I was not aware of it. It is an interesting piece of Irish labour history that I did not know. I do know about the tronc, however. The term comes from France, where, originally, there was a tronc, or alms box, at the back of a church. Very clearly, a gift is implied.

Work permits comprise a big problem at the moment. I am sure all the Senators' offices are getting many queries about them. I certainly am. There is now a backlog of approximately 19 or 20 weeks in processing work permits in the Department. There is a reason: employers are struggling to get staff, not just in Ireland but also in the rest of the European Union. The number of work permit applications is up 70% on this time last year. That is a distortion because last year was a year of the pandemic, but even compared with 2019, before the pandemic, the figure is up by about 50%. Therefore, there is a huge demand to bring people from outside the European Economic Area to Ireland to work. Since we have made work permits possible for many more categories, including in construction and agriculture, there has been a big increase in demand. The number of staff processing work permits has increased from 19 to 55, but many of them have not done it before and are learning about it for the first time. It will take a couple of months before we can improve the situation, but we are monitoring it weekly.

Senator Burke asked a very good question: could an employer have a no-tips policy? That is not saying there should not be any tips but that it is not his or her business. I believe the answer is "Yes" but I will check. Whether an employer could just say he or she does not get involved with tips and that they are a matter for the staff is a good question that we need to check out. In that scenario, the tips would have to be cash only or paid through Strikepay or TiPJAR. Once the money is paid electronically, it does become the employer's business, and that is where it gets complicated. The world is probably a lot easier when there are cash tips only. It has been complicated by electronic payments.

The legislation does not alter the tax treatment of tips in any way. That is a matter for the Finance Acts. I have deliberately not addressed the matter in this legislation because any change to tax treatment would have to be achieved through the Finance Acts.

The Seanad adjourned at 6.59 p.m. until 10.30 a.m. on Wednesday, 2 February 2022.

Seanad Éireann debate - Tuesday, 1 Feb 2022

Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022: Second Stage

Seanad Éireann debate -
Tuesday, 1 Feb 2022