The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 gives employees a legal entitlement to receive tips and gratuities paid in electronic form and requires that these tips and gratuities should be paid to workers in a manner that is fair in the circumstances.

Any charge called a ‘service charge’, or anything that would lead a customer to believe it is a charge for service, will have to be distributed to staff as if it were a tip or gratuity received by electronic means.

A fair distribution of tips will be context-specific, taking into account such matters as the seniority or experience of an employee, the value of sales generated by them, the number of hours worked and so on.

There will be a four-week period between now and 1 December to provide employers with a lead-in time to prepare for the changes required by the new law which have been well-signalled in advance.

Tánaiste and enterprise, trade and employment minister Leo Varadkar said: “Tips can form a significant percentage of a worker’s take-home pay and these changes go a long way to ensuring those tips are distributed to the people who have earned them.

“This new law is a positive step towards improving the rights and entitlements of lower-paid workers as well as providing transparency for customers.

“While most employers treat their staff fairly, this will help to stamp out bad practices where they exist and give customers the confidence that gratuities are paid to staff.”

The Act requires the minister to review the legislation after it has been in effect for one year to allow the government to assess the effectiveness of the measures and assess whether any further measures are necessary.