Since everybody else has welcomed the workers and their representatives, I will also welcome them, particularly Mr. Shevlin. I hope Ratoath's residents treated him well on Sunday. He is welcome back any time. I wish to focus on the people who have championed this cause over the past number of months. That goes for Senator Gavan as well because the intent behind this Bill is honest and displays integrity. It is important to say that because the aim of this Bill is the same as what I will propose at the end of this little ramble.
I also hope to set out the reasons I cannot support the Bill. I appreciate that Senator McDowell might want to tar my reputation by referring to level of standards to which he aspired when he was a Minister. However, I certainly do not feel that I have a monopoly on wisdom and I do not have a particular penchant for having my name at the end of a Bill as long as it does exactly what we intend it to do. The Senator tarring me in that way is a bit disrespectful. While I accept that we are all on the same page and all want the same thing, I will outline the reasons why I cannot support the Bill.
In the first instance, we should address suggested definition contained in Sinn Féin's amendment. The proposed insertion of the definition of "employee" contained in the Organisation of Working Time Act into the National Minimum Wage Act would be confusing and impractical because one Act would then contain two definitions of a single term that were developed for different purposes. That is almost irrelevant and we could fix it but it is the basis on which I am opposed to the amendment.
I am also opposed to the Bill in its entirety. Clearly, the Bill is honest in its intent. It seeks to provide additional protections for employees working in the hospitality sector and other sectors who depend on tips in order to reach a decent standard of living. Senator Gavan obviously thinks it winds me up that Fine Gael is opposing the Bill. It is not Fine Gael that is opposing the Bill, the Government - including a number of Independent colleagues - is opposing it. We are not opposing the Bill purely for the sake of doing so because we have been we were engaging with the Senator. He is aware that we asked the Low Pay Commission to conduct a review of current practices on tips and to report back to me and to the Houses with its findings and what it considers to be necessary in order to effect change. It is not fair to state that we have not acted for eight years. The Senator's Bill was only published two years ago. We engaged with him on Second Stage and said that we would engage with the Low Pay Commission, which we did. The commission consulted extensively and returned with a very detailed report. I wish to place on record the fact that I have the utmost respect for the members of the Low Pay Commission, as, I hope, everybody else does.
The conclusions of the Low Pay Commission's report were unanimous and strong. We are all aware of the representative bodies that make up the commission.. The commission consulted widely and has representation across all stakeholders, including union representatives, worker bodies and industry. It advised me strongly against introducing a heavily regulated regime in this area or primary legislation. It warned me that legislation would be unworkable from an adjudication perspective and from the point of view of enforcement. That point was reiterated by the Workplace Relations Commission, which is the body that would have to enforce this legislation if or when it is passed. I have been informed that the legislation is unenforceable.
The Low Pay Commission also warned that there would be unintended negative consequences for people in the industry who, in the main, are lower paid workers. Those consequences include the reclassification of service charges, which could lead to a reduction in people's take-home pay. Regardless of whether one calls it the money they get through the PAYE system, the wages system or what they take home as cash in hand, if we pass this Bill, that will be no more and there will be a reduction in take-home pay. I do not believe any Senator or anyone in the Public Gallery expects or wants that to be the result of this Bill being passed. It would be unwise of all of us if we were to ignore recommendations of the Low Pay Commission.
It is because of that, the context of the recommendations and the work and intent behind what the Senator is trying to do that I have come up with the new proposals I outlined to his party leader in the Dáil yesterday. I have considered the Low Pay Commission's report and listened genuinely to the concerns of the union representatives and others who came to meet me. The Senator is right - I meet a wide variety of stakeholders because my job involves doing so. It is not my job to side with anybody, although that is a charge which, for some reason, the Senator seems to throw in my face all the time. Regardless of whether it is me or somebody else in the role - it could be the good Senator in the future - it is the Minister's job to provide independent legislation that is robust and that actually does what we all want it to do. It was on this basis that I met a wide range of people.
What we propose to do is amend the Payment of Wages Act 1991 in order to ensure that it will be illegal for tips to make up or satisfy any part of a person's contractual hourly, weekly or monthly wage. We will also provide in law to place a requirement on employers to clearly display for the benefit of workers and patrons of these establishments their policy on how tips, gratuities and service charges are distributed. This must be in clear public view and will be subject to an inspection regime of the Workplace Relations Commission. My Department will monitor the effects of the legislation as it is bedded down with a view to carefully considering whether there is any further legislation that will arise from the passage of those pieces of Bill if it is necessary. By limiting the scope of the legislation in this way, we will support low-paid workers and workers in precarious situations and avoid the pitfalls the Low Pay Commission suggests will arise if we pass the Bill before the House. The heads of the legislation to which I refer are being drafted by my Department officials and I will bring a memorandum to Cabinet shortly.
The Senator mentioned the simplicity of his Bill on a number of occasions. That is probably the real reason I cannot support it. It is anything but simple. There are a number of reasons for this, including technical issues that will make it unworkable. Senator McDowell made the charge that I would not work with this Bill. It would be far easier to amend the Payment of Wages Act and produce exactly the same outcome as spending an awful lot of time trying to amend the Bill in order to get the desired effect. For argument's sake, the Bill proposes to amend the National Minimum Wage Act in a way that fails to distinguish between tips and service charges despite the fact that the National Minimum Wage Act does distinguish between them. That distinction is really important and if it is not clear in the Bill, the calculation of a person's minimum wage will come under scrutiny and employers will be required to do exactly the same with tips as they do with service charges, which is a perfectly legal arrangement. This would mean that all tips, be they cash or through the trunk system or however they are paid, would have to go through the PAYE system and, ultimately, everybody who works in the hospitality sector would end up earning less. I could not stand over that. Senator Gavan is right to state that all income is taxable. However, as Senator Norris observed, gifts are different. Unfortunately, in this country, gifts are not different. They are all treated as being taxable, which is why we have gift tax. As a result, every form of income is taxable as far as the Revenue Commissioners are concerned but the difference is that under current practice, people who receive tips are responsible for declaring them at the end of the year. If this Bill passes, that will immediately become the responsibility of the employer and people's entitlement to receive, in full, the tips they currently receive will be taken away just to try to fix a problem relating to a few rogue employers who need to be brought into line by means of new legislation.
However, we would end up having the unintended consequence of everybody who relies on tips earning less. They would also then be subject to having those earnings, from a PAYE perspective, increased which would have an impact on their housing assistance payments, HAP, medical card applications and working family payments. Their income would be perceived as being more, although their take-home pay would be less. It would have a disastrous effect on the application of all social welfare benefits.
My Department and I have met several bodies from the hospitality industry. I was pleased with the response from these bodies, including the Irish Hotels Federation, along with the taxi, restaurant and hairdressing representative associations, and their co-operation in providing a code of practice with regard to displaying policy on tips in establishments. There are no interested parties, including those with first-hand testimonies, in allowing the more undesirable practices which exist in the industry. As for Senator Gavan’s case of a young lady in Limerick, once the payment of wages legislation has been passed, no more will she have to take that sneering from her employer and that she has no rights to her tips. She absolutely does. More importantly, that employer should be wary of the State coming after him. The undignified way the employee in question has been treated is the reason we need to have an inspection regime and make a change to the Payment of Wages Act.
The proposals will tackle head on the main issues in the industry, namely, that employers are unfairly taking tips to which they have no right. We will make it unlawful for them to do that through sanctions. We are proposing to put an end to the lack of transparency for customers. As Senators pointed out, many customers assume their tips, either through card payments, cash or service charges, go directly to the employees. We need to ensure there is transparency in policies, as well as an inspection regime to ensure these policies are upheld.
Transparency will send a strong and positive message. It will have a proper impact on how patrons, employers and employees will behave. Most employers want to do the right thing. For those who do not, however, I hope a clear message will be sent from all of us that we will not tolerate employers taking employees’ tips. We will pass legislation to ensure they do not but it will also be simple legislation to ensure there are not any unintended consequences. We must also ensure that those who rely on their tips get to bring home those tips to which they are entitled while ensuring they do not end up in the back of the taxman’s coffers.