Pat Casey (Fianna Fail) | Oireachtas source

I contributed to the debate on Second Stage. I grew up and spent all my life in this industry. I have been an employee and an employer; I have been on both sides of the fence in respect of the matter to which the Bill relates. I have seen the distribution of tips in many forms, guises and modules in many hotels and restaurants. Some tips are divided equally and some are divided unequally. I have had good experiences and bad, but as a person involved in the industry, it is disappointing that we have had to introduce legislation around tipping within the industry. It is disappointing that we had to do this and that there are people who are abusing the system. I am not denying that. Most of the people in the hotel and restaurant industry treat tips properly and try to distribute them fairly. Sometimes I have had to create inventive schemes where a tip would go all the way down through the services. However, there are some people the tips do not actually get to, namely, the person in the kitchen washing the pots or filling the dishwasher or the one working upstairs or in the reception. They do not have access to the same level of tips as a waiter or waitress. In my time in the industry, I have always tried to come up with a group scheme that everybody contributed to and then we tried to divide it out equally. It does not really work that way.

I accept this legislation. It clarifies a lot of stuff, and I have no major issue with it. When I was in college and was working in some of the bigger hotels in Dublin, there were two service charges. There was a 2.5% booking service charge and then some hotels had a 10% or 12.5% service charge on top of that. As a result, people were paying between 12.5% and 15% in service charges.

I am going to reiterate something I said on Second Stage. We are opening a can of worms with this legislation. I need people to look a little bit further down the road. We have not defined what a tip is in the context of the Finance Act. This means that these tips, which will now probably be electronically controlled in most situations, will be available to Revenue. Consequently, they will probably be exposed to tax at some point, which is not the case at present. I said that maybe we should have defined a tip as a gift because it is defined in the Finance Act, and then it would not be subject to taxation down the road. I have a genuine concern that at some point in the future Revenue will look at all tips as a revenue stream and they will be taxed. I am just saying that here. I said it openly on the previous occasion and I am saying it openly again today. This is what this Bill is doing. We have nearly moved to a situation where payments are made electronically. Most tips are now tracked electronically. That information is available to Revenue. The hospitality sector must divide it by using some format that shows clear evidence it has been done. I can see Revenue focusing in on this at some time in the future as a source of revenue from its point of view.

Senator Gavan referred to the JLC. I spoke about the JLC on Second Stage. As a person who had to take over my father's business when he died suddenly at 57 years of age, I relied at the time on the JLC agreement to give me the rates of pay I should have in the industry and what I should be paying. What the JLC also did was identify a higher rate of pay where people were working in non-tipping zones. That is where I got the whole emphasis on a tip being shared across all the services, and not just by the waiter or the bartender. It takes many people to deliver a service. I have no problem with reintroducing a JLC. It identifies the different services that are provided within the industry and applies a different rate to them.

On the minimum wage and the low rate of pay, I am not going to say it is not but we also have to acknowledge it from a hospitality industry and a tourism industry perspective. Ours is a very labour-intensive industry. Anywhere between 35% to 45% of your costs are labour costs. That is quite significant against your turnover. We talked about the Sick Leave Bill earlier. For a company that has labour costs of 5%, having to pay sick pay is not a major concern. In an industry like the service industry, however, where 35% to 45% of the cost is labour, then that is a much higher cost pro rata. Our industry, the same as everybody in Irish society, is paying over and above what is being paid in the rest of Europe, be it for electricity, oil or insurance.The input costs of the hospitality sector are quite stringent as well and the industry faces a lot of challenges. It is not straightforward to state that we can simply pay the living wage. You also must take the seasonality of hotels into consideration. The labour costs of seasonal hotels are much higher than in hotels that operate at a certain level across 12 months of the year. It is much easier to define your costs if your hotel is open 12 months a year and there is a regular income and sales level across that period. Seasonal hotels are open for six months or nine months or for ten months and some weekends.

As a person from the industry, I am disappointed that this Bill had to be introduced. I accept this legislation; I have no problem with it. I have identified the key issue regarding revenue that will have to be dealt with down the road. Equally, I note to Senator Gavan that I had no problem with the JLCs and I used them during my time in the industry.