Employers must share tips, gratuities and service charges amongst employees fairly.

The Payments of Wages (Amendment) (Tips and Gratuities) Act 2022 became law in July and comes into effect today 1st December.

According to Citizen’s Information:

“The Act, introduces new rules about how employers share tips, gratuities and service charges amongst employees. It also makes it illegal for employers to use tips or gratuities to make up basic wages.The legislation will be reviewed after one year to assess its effectiveness and decide if further measures are needed.”

There will also be restrictions on using the term “service charge”. The Citizen’s Information website says this of the restrictions.

“Voluntary service charges are the same as a tip or a gratuity. Mandatory service charges are charges that must be paid by the customer, on top of the cost of the product or service.

Employers are banned from describing a mandatory service charge applied to a customer’s bill as a ‘service charge’ unless the payment is treated by the employer in the same way as electronic tips or gratuities.

This means that mandatory service charges can only be added to a bill if the money goes to employees.”

This new act aims to provide better rights for employees, and to make tipping more transparent and fair.

Header image via Shutterstock 

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