Union warns that mandatory service charge could reinforce profits while reducing customer tipping

January 31st: Trade union Unite, which represents hospitality workers throughout Ireland, has written to the Tanaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, outlining the union’s response to the ‘tips’ legislation published last week.

Commenting, Unite Hospitality and Tourism Coordinator Julia Marciniak said:

“Unite had a constructive meeting with the Tanaiste earlier this month regarding the proposed legislation, and we welcome the fact that the published legislation clearly defines ‘tips or gratuities’ as payments intended by a customer to be kept by the employee or shared among employees.

“We also welcome the strong protection of credit card tips, and the requirement for employers to distribute all tips and gratuities received by electronic mode to the employees for whom they are intended.

“Unite has long campaigned for tips to be ring-fenced for workers, and we welcome the fact that this is reflected in the Bill”.

Karen Doyle is Secretary of Unite’s Hospitality Branch and noted that, notwithstanding the welcome elements of the proposed legislation, Unite has some remaining concerns:

“We believe that the provision for a mandatory service charge could have perverse consequences, providing additional profits for business while reducing the likelihood of customers leaving tips for workers.

“Unite is also concerned that taking employees’ seniority and/or qualifications into account when distributing credit card tips could result in a situation where those who already receive higher wages – for example, persons in management positions – could also receive a greater share of tips.  We would therefore urge that a recognition of the general principal that gifts/tips are especially valuable for low-paid workers be included in the legislation”.

Continuing, Julia Marciniak said:

“Legislation is only as good as its enforcement, and in this regard Unite proposes adding an additional provision which reverses the burden of compliance from the worker to the employer.  It is also our view that the legislation should make provision for a dedicated and adequately resourced unit within the WRC to ensure compliance with this legislation.  That unit must have the right to carry out unannounced inspections of workplaces.

“Unite looks forward to engaging with all parties during the pre-legislative scrutiny process to further improve the legislation and ensure that it meets workers’ needs”, Ms Marciniak concluded.

A copy of Unite’s survey of workers in the hospitality sector conducted in 2021 is available here

The Unite Hospitality Branch position on addressing tip theft is available here

The Unite Hospitality Branch’s commentary on the Payment of Wages (amendment)(tips and gratuities) Bill 2022 is available here