Dáil Éireann Debate, Wednesday - 23 October 2019
77. Deputy Joan Collins asked the Minister for Employment Affairs and Social Protection her views on whether the payment of wages Bill is not robust enough to protect workers in the hospitality industry in view of the issues that came to light at pre-legislative scrutiny recently. [43638/19]
View answerI have noted with interest the contributions made by all parties during recent the pre-legislative scrutiny of the Scheme of the Payment of Wages (Amendment) Bill by the Joint Oireachtas Committee on Employment Affairs and Social Protection.
The Bill carries forward the long-established distinction between ‘tips and gratuities’ on the one hand and ‘service charges’ on the other. Existing legislation allows service charges to form a reckonable component of a worker’s pay or wages. In developing these proposals, I have been guided by both the National Minimum Wage Act and the Low Pay Commission’s 2018 report: “A Review of Current Practices in relation to Tips & Gratuities”.
Currently, service charges are a non-discretionary contractually imposed element of a customer’s bill, are liable for VAT, and form part of a business’ operating income. They are used by businesses in a variety of ways, including covering some or all of their wage costs. I believe, therefore, that it is not currently possible or desirable to ignore this reality in my proposed Bill, which I have committed to progress in the short term.
The Bill will prohibit tips and gratuities from forming part of a person’s contractual wages, not just the National Minimum Wage. It will also bring transparency to tipping policies for the benefit of staff and customers. This is obviously a step in the right direction. However, I remain concerned by the potential for monies, generally intended by customers for the staff who have served them, to go elsewhere as a result of how service charges are treated under existing legislation.
In this regard I have requested the Low Pay Commission to include this question in relation to service charges as part of its year’s work programme and report to me its views and recommendations.
I look forward to working with members on all sides of the Houses of the Oireachtas to progress this Bill as expeditiously as possible in order to deliver legislation that is fair, balanced and that works in practice.
I trust this clarifies matters for the Deputy.
