Paul Gavan (Sinn Fein) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I will begin by welcoming the Minister of State at the Department of Employment Affairs and Social Protection, Deputy Pat Breen, to the Chamber. I also welcome our colleagues in the Public Gallery who will be joined by others for this evening's debate. The purpose of this Bill is very simple. If enacted, it will give workers in the services sector a legal right to hold on to tips they earn in the workplace. It is a Bill which will make it illegal for an employer to withhold, deduct or demand the return of a tip from an employee unless the employer has a lawful reason.

Sinn Féin is delighted to have the backing of both SIPTU and Mandate which have expressed public support for the Bill. SIPTU and Mandate represent thousands of workers in the service sector and they understand the seriousness of this issue. Recent research shows the prevalence of this problem. One such piece of research carried out last year by my own party in Galway, which collected over 400 written responses, found that 34% of workers reported that they regularly experienced the withholding of tips by their employer. That is unacceptable. Further research by SIPTU, the Migrants Right Centre Ireland andthejournal.iehas supported these findings with similar results.

I would like to give the Minister of State and the House a flavour of the testimonies we received. The first is from James, who is on his way to the Chamber as I speak. He is 24 years old and this is what he had to say:

I began working in a well-known, up-market restaurant chain. I was told that I wouldn't receive any of the tips I earned during my trial period, which was supposed to last just one week. On my second day I was told by other staff members that the company would ensure my trial lasted until I made an issue of it. So I did, after 1 week. Thereafter, on finishing my trial period, I was told that I would only take home 50% of the tips I earned each night.

A second testimony was from William, who is 26 years old.

While working in a café in Maynooth I had my wages taken without consent. From the start, management said that they would be withholding my tips for work night outs and a Christmas party. I was outraged. I was only getting €9.15 an hour and my tips were vital in order to pay my rent and buy food.

The thejournal.ieinvestigation also found that workers tips would be used to supplement the till if it happened to be short or if it was a slow night the employer would just say that no tips would be handed out that evening. We cannot allow this to continue.

The unfortunate reality of the hospitality industry is that many workers depend on the tips they earn at work. Of course, it would be my preference that workers were paid a living wage and did not have to rely on tips to survive but their situation is a by-product of a sector in which low pay, precarious employment and poor work conditions are the norm. Last year a worker in the hospitality sector earned an average weekly wage of €324 which is less than half of the national weekly average earnings of €697. That is poverty pay, with workers' wages often falling below the national minimum wage. The food and drink sector is no different. Last year of 717 inspections made by the Workplace Relations Commission, WRC, 48% of employers were found to be in breach of the law and owed unpaid wages amounting to €332,000. Fortunately, through the WRC process, these wages were repaid to workers. However, most relevant to this Bill, tips were not returned to workers as they do not have a legal entitlement to their own tips. This Bill would address this issue and ensure that withheld tips are seen as a debt owed to the employee by the employer. There are over 150,000 workers employed in the hospitality sector. I am sure that almost everyone in this Chamber knows someone who works in a hotel or a restaurant. Is it acceptable that those workers on low pay, zero-hour contracts are denied the right to take home the tips they earn? That is what is happening across a percentage of businesses in Ireland.

The British Government has also recently published a report, the research for which was carried out over an eight-month period. That report found serious issues regarding the withholding of tips and the mismanagement of shared tipping schemes. Very famously, researchers found a pizza restaurant chain that withheld 12% of credit card tips as a so-called administration fee. That is just wage theft and we should it call it for what it is. The Bill we are putting forward is modelled on a Canadian Bill which was introduced last year in Ontario to deal with the very same issue. It appears that this is a universal problem and is not unique to Ireland.

I will briefly take the House through this simple Bill. Section 1 is self-explanatory. Under section 2, I would like to highlight the various definitions of a tip and in particular the fact that we are including a service charge, as often money is retained by an employer under this heading. We also give a definition of a tronc scheme, that is, a common fund into which tips are paid for distribution to staff. Section 3 outlines the protections of the new Bill and is broadly in line with existing workers' rights legislation. The crucial parts are 10F(1) which holds that an employer shall not withhold tips or other gratuities from an employee or make a deduction from an employees tips and 10F(2) which holds that if an employer contravenes subsection (1) the amount withheld or deducted will be recorded as a debt owed to the employee by the employer. This is crucial. In my job as a trade union official, I often brought restaurant workers to the WRC over basic breaches of employment law.I was able to win back moneys owed to workers for holidays, lack of notice and so forth. I was never able to do anything about the tips that were kept week after week because there is no legal mechanism available in respect of tips.

In section 3, the proposed section 10F(4)(a) of the principal Act will mandate businesses to display on their menus or in another suitable manner the tipping policy, so there is transparency for customers with regard to whom and how tips are distributed. Everyone should be able to welcome this provision. I imagine I am not alone in wondering when I pay a service charge whether the workers receive it. We should recognise that there are many good employers in the sector and many employers ensure that happens, but at the moment we actually have no means of knowing - there is no legal certainty. The Bill will address that point and will give customers transparency. Who could possibly argue with that? Customers want to know where their tips are going. They want transparency so that when they hand over tips, either they go directly to an employee or into a shared tronc scheme to be distributed to the backroom staff. The proposed section 10F(4)(b) requires the Minister to introduce regulations to facilitate the introduction of tronc schemes check to ensure the equitable distribution of tips. This is important because it enables people in the backroom, including kitchen porters and chefs, to be included. Often, they are forgotten about. The proposed sections 10F(4)(d) and 10F(4)(e) ensure that where owners are involved in the same work as staff, they too are included in the receipt of tips. We are not here to disadvantage owners of small restaurants.

Section 4 details the offences and section 5 covers the existence of collective arrangements with regard to tips.

I wish to address briefly the issue of tax. I wish to be clear: the Bill will not change the practice or theory of tips and taxation. The current position of Revenue is that where tips are routed through the employer, then PAYE, USC and PRSI must be applied to the amount paid, including employer PRSI. If tips are received directly from patrons, there is no obligation on the employer to operate PAYE, USC and PRSI on the amounts received. Employees are obliged to declare tips received in their annual return of income. In the case of credit card tips, the employer must operate PAYE, USC and PRSI on the tips received. In other words, all these issues will stay exactly the same. Employees will be required to declare their tips to Revenue.

That is the current situation. The Bill simply attempts to provide that where an employee earns a tip, he or she gets to take that tip home. The word "tax" is not mentioned in the Bill. No tax regulations are interfered with or altered. The only reason I mention this is because I believe the tactic of using the tax issue has been raised by the Restaurants Association of Ireland. It is a straw man; it is fake news. It does not stand up.