New Law on Tipping Starts on 1st December 2022

There is a new law coming into effect on 1st December 2022.

The act is The Payment of Wages (Amendment) (Tips and Gratuities) Act 2022 and makes provision for how tips, gratuities and service charges are to be shared between employees. It amends the Payment of Wages Act 1991 and distinguishes between a mandatory charge, imposed by the service provider, and a voluntary payment such as a tip or gratuity given by the consumer/customer.

Employers cannot now describe a mandatory service charge applied to a bill as a service charge unless the payment is treated in the same way as a tip or gratuity. The effect of this provision is that service charges can only be added to a bill if the money goes to the employees.

All employees must be consulted on how the tips/gratuities are to be distributed between employees.

Electronic tips (by card or smart phone) must be distributed in a transparent, fair way. Factors to be considered when deciding how to distribute tips include

  • The worker’s role in the delivery of service
  • Full time or part time contract
  • Number of hours worked
  • Value of sales
  • Seniority or experience of the employee

The employers must give a statement to the employees showing how the tips have been distributed within 10 days of distribution.

Cash tips are paid directly to the worker and the employer must publish a notice about how cash tips are distributed.

This “Tips and Gratuities Notice” must state

  1. Whether or not tips and gratuities are distributed amongst staff
  2. The way they are distributed and the amounts
  3. Whether or not service charges are distributed, and how if they are

These rules are to be enforce through the WRC (Workplace Relations Commission) who can order an employer to reimburse any unlawful tip or gratuity deductions.

If the employee is not happy that the law is being applied in the workplace, he/she must first speak to the employer about it. If this does not resolve the problem, she can submit a claim to the Workplace Relations Commission in the usual way.

This complaint must be submitted within 6 months of the alleged breach.

Here is the act again.