Wednesday, 29 June 2022
Payment of Wages (Amendment) (Tips and Gratuities) Bill 2022: Committee and Remaining Stages
The group of amendments relate to the insertion of a new section in the Bill. Amendment No. 1 means that the Minister will be defined for the purpose of the Bill as the Minister for Enterprise, Trade and Employment. It is required because of the new provisions we are inserting requiring a review of the Bill once it is enacted and in force for more than a year. The new section 9 provides a review clause for the Bill. It will be reviewed after one year in operation when employers, employees and customers will have an experience of how the legislation works in practice. The review must be completed within six months and laid before the Oireachtas. It will help us determine what changes, if any, may be required. That was an ask at an early stage, that it would have a built-in review. That is there now.
In regard to the new section under 4D it provides that if an employer describes a mandatory charge as a "service charge" or a similar term in a tips and gratuities notice or, for example, on a restaurant menu, the employer must treat the charge as if it was a tip or gratuity received by electronic mode of payment. That means that the service charge must be distributed to staff in a fair and reasonable way. This does not restrict a business from imposing charges which form part of that business's normal revenues. It simply prohibits it from describing it as a service charge. Businesses remain free to impose a cover charge or a table charge, however they wish to describe such additional charges, provided the description does not give rise to a reasonable expectation from customers that the charge concerned is distributed to staff. This is consistent with a key aim of the Bill which is to introduce greater transparency for customers and avoid confusion as to what constitutes a service charge. The clarity for customers and staff is a key aim of the Bill and is a key aim of what Senators want from the initial discussions. All of the other amendments are necessary corrections to internal cross-references if the Seanad agrees to insert this new section.
I will speak in general about what we are trying to achieve here with all the other amendments. I think we are at one in what we are trying to achieve. I will make a brief observation that the Government amendments proposed today and the amendments Senators are proposing are really quite similar in intent. They are just using different methods to achieve the same end result. We want to make sure that customers and workers in the hospitality sector, in particular, are clear on what a service charge is, that is, a charge that benefits staff above and beyond the minimum contractual terms, and that is whether it is discretionary or mandatory - in short, that it is very like a tip or gratuity except that it is not always discretionary. We want to make sure that where something is described as a "service charge" in the sector, customers and staff have a reasonable expectation that staff will receive it.
We do not want to be heavy-handed and require massive amounts of signage apart from anything else that could be an eyesore in some settings, but I understand why people want to make it very clear what this is about so we think changing the definitions is the best way to do it. We want the reasonable expectations of customers and staff to be met and to have a mechanism for complaints to the Workplace Relations Commission.
I hope Senators will look favourably on the Government amendments which are designed to enhance the clarity for everyone. If it is called a "service charge" in any shape or form, then it is expected that it is included in the tips and gratuities. What we are saying is that you can have other charges that are clearly defined, but not related to service.
It is good to see this Bill back before the House. It is good that there has been a real consultation on the key issue of the service charge.
I will begin by introducing our colleagues in the Gallery this evening. They are Joe Cunningham, general secretary of SIPTU, Fiona Dunne from the ONE Movement and Clem Shevlin from SIPTU. They are here specifically to listen to the debate on this Stage because they played a leading role in the campaign around my tips Bill in the previous Seanad and in the context of ensuring respect and dignity for workers in the sector. The trade union movement deserves a huge amount of credit for the campaign it has built behind the issue of tips justice and, related to that, the very important issue of the service charge.
I do not mind which amendments are passed in order to achieve the goal I hope we all want to see being realised, namely, an end to what has been the scandal of service charges. A host of large restaurant chains operating in this city slap on service charges that customers may well think have been going to the staff when that has not been the case. Unfortunately, we are all familiar with some hotels, and I stress some, that also slap on a service charge once there are six people in a group. I can tell the House, from first-hand experience as someone who has worked as a trade union official and worked in this sector, that all too often those charges were unfortunately not passed on to the people who earned them, that is, those who delivered the service.
It has been a long journey. The original tips Bill, which was a Sinn Féin Bill, had a broad campaign of support behind it, including from the Labour Party and the Civil Engagement Group. That started five years ago. It was frustrating to see our Bill blocked by a money message, and quite a cynical one, in the previous Dáil. That said, the point to make is that there was a major campaign and a head of steam built up around this issue. It simply did not go away. It featured in the general election campaign, and that was where we got commitments, I think from all parties, to deal with the issue. Therefore, we are pleased to see this Bill.
We are pleased about Committee Stage because we had a good exchange of views on Second Stage and, in fairness, the Government said it would listen and take on board our concerns about the service charge. I am sure I will not be the only person to mention this but the key aspect pointed out to us was that the origin of service charges in Dublin was after a strike by trade union workers in the sector who needed a decent pay rise. The solution to that was the introduction of a service charge that was distributed by trade unions. That was the origin of the service charge in Dublin in 1951. I will not be the only one to credit Norman Croke for that, but he has fought ferociously and lobbied a number of us on this issue. I pay tribute to Dr. Deirdre Curran, who, as an academic, has done fantastic work in this sector.
I remind colleagues of a point I made a few minutes ago. We still have huge issues in this sector. According the Government's own body, 68% of workers in the sector earn less than €12 per hour. The solution to that is a joint labour committee, JLC. If the Government wants this sector to be one in which people can have decent careers and look forward to pay progression and respect, then we need to reinstitute a JLC to make that happen. Surely none of us can accept a sector in which, according to Fáilte Ireland, 70% of workers, or seven out of every ten, earn less than €12 per hour. That is not a sector people can have careers in. There is a bigger conversation to be had on that, but I welcome the fact the Government has listened.
I pay tribute to those in the trade union movement who led this campaign from the start. We will do good work tonight to ensure decent legislation on tips. There are one or two other points I will raise during the course of the debate, but this is something of which we can all be proud.
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.
I very much welcome this amendment. I had the privilege of speaking on this on Second Stage when I touched on the fact that I am married to someone who worked in the hotel and hospitality industry and who was involved in the hotels, restaurants and catering branch of what was originally the Irish Transport and General Workers Union, ITGWU, which became SIPTU. In that context, he avoided particular establishments around Dublin because their owners would dip into tips and use them for payment of wages. How scandalous was that? In my early experiences of dating him, he would not go into places but then gave me the history of the events in 1951 to which Senator Gavan has alluded, when an employee of a hotel was disciplined for eating in rather shameful circumstances. Due to his low rate of pay, he ate from the discarded food of the hotel for which he was disciplined. A strike arose from that, which resulted in a service charge being implemented. That is the history of how the trade union movement was prepared to stand up for those workers and, consequently, a service charge came into being.
I spoke about that on Second Stage and supported the contention regarding service charges that was made to the Tánaiste in that debate. I continued my advocacy afterwards to the Tánaiste and I was advised that I needed some sort of evidence of the history. Thankfully, a colleague of my husband, Norman Croke, who was a great trade union official, supplied me with his historical report of the hotels, restaurants, and catering branch's 75th anniversary, which tracked all of these changes and referred to the developments, security and standing of the service charge. I am very pleased that this amendment is in place. It is very necessary and right. As it honours a custom and practice that has been in place for well over half a century, it is important that this amendment was brought in. I am very grateful to the Tánaiste for taking on board everything that was said to him by all parties, including the trade unions that met him. It is a very important feature. On the departure of those in the hospitality industry post Covid and the difficulty in getting workers, a JLC is possibly a solution to that. I also think that is very good in that regard.
I pay tribute to Norman Croke and to my husband, Dave Kearney, who never would have let me live it down had I not spoken up for service charges, and all of those who fought for services charges to be in place. It is important that this is absolutely red-circled for the workers for which it is intended and for those of us who are the patrons of establishments and believed all along that service charges were going to staff. Now we know that there are. A couple of cases before the Workplace Relations Commission and we will make sure that everyone comes into line.
I welcome and thank members of SIPTU. As Senator Seery Kearney said, we are here because of a collective effort and the input of so many. Senator Gavan's tips Bill was a starting point and it acted as a catalyst. In fairness to the Minister of State, Deputy English, and the Tánaiste, there was engagement and a willingness to listen to what we are speaking about. Senator Seery Kearney used a great phrase "red-circled for the workers". That is who we are here for today and who the Bill, whose interest is the employee, will benefit.
We should reflect upon Senator Casey's contribution for a number of reasons. I am probably one of the old-school people who does not use Revolut, does not like to pay in restaurants-----
I do not mind paying but - I mean this with the best intention - I actually have a fear of paying a tip in a bill using a card and I actually refuse to do so. I know I am old school and old fashioned and I put my hand up but Senator Casey's contribution reinforces that principle in my mind and my continued determination not to do that. There is a myriad of reasons that we will not go into because it could open another Pandora's box. Senator Casey made a fine point and we should reflect upon it. In an ideal world, we would not be here because staff should be in receipt of the tip and service charge as a matter of form, but it is not so.
We heard the history involved tonight. Many people do not understand what the service charge is for and why they pay it, and I am glad that will change now. I know we use the word "transparency" with abandon, but it is important that there is clarity in the Bill.
The Bill brings positive news for hard-working staff in our hospitality sector. To those watching or listening to the debate, I thank the staff who serve and wait tables, pull pints, work in hotels and the service industry, and work antisocial hours to give people a quality of service in our hospitality sector. It is very easy for people to go onto Tripadvisor or social media to criticise establishments and staff. I ask that they pay a ten-second delay before they put their fingers to the buttons. They should remember that staff are working in pressurised environments and sometimes do not get everything right. Nine times out of ten, the quality of the hospitality is phenomenal.
We welcome that the money goes to the staff - that is the principle - but I ask that we reflect upon what Senator Casey said in the debate. The Minister of State again showed the importance of listening and engaging. At a time when the Government gets criticised for many things, the last two Bills today are an example of when the Government has engaged critically and has emerged with legislation that will benefit the worker, which is important.
I acknowledge the history of the Bill. I was certainly not rewriting Sinn Féin's Private Member's Bill. To be clear, I do not think it was opposed on the grounds of money. I think there were some technical difficulties at the time in 2017 or 2018. In Senator Doherty's absence, I wish to mention that when she was the Minister with responsibility for social protection, she brought forward a Bill to replace and add to the Sinn Féin Bill. A lot of work was done on that on Committee Stage and in pre-legislative scrutiny in the autumn of 2019, before the general election of 2020, which fed into this Bill and put us into a position to progress the Bill. Everyone in the Chamber has played a part in this and I recognise that we do that as well.
It is a positive Bill for an important sector in this country. It is important that employees get their entitlements, which certainly should not be taken from them. I also acknowledge that the majority of employers do the right thing but, like any legislation we bring forward, this Bill deals with those who do not. For those who have been doing the right thing up to now, the Bill will not change much in how they operate.It will not change much in terms of how they operate, but those who are not will have to review their operations, and rightly so. We will deal with some more amendments later but I think we all agree with the main aims of this Bill. That is what the Tánaiste brought forward in February in Second Stage. He undertook to look at the concerns raised in this House. It was important that the legislation started in this House and continued the work of Senator Doherty. We will finish here, bring it to the Dáil and try to have it dealt with before the summer. That is what we are trying to do. I want to acknowledge and thank all involved for the agreement to work on this Bill to try to get it finished tonight. That will help to put this in place over the summer for those who are in the sector.
It is an important sector. I might get a chance to say more later on, but it is one I worked in for many years. I value my time in it. However, we have much to do in making it a career of choice and a long-term career where people can earn a good wage and support their families. The joint labour committee, JLC, method is one way of doing it. It was there in the past but has not been used. Like other sectors, I value the JLC.. We see the benefits of it with childcare. We should look an employment regulation order, ERO. We should also look at the training and supports. I made very clear here before that I am happy that my Department works with Department of Education, the Department of Social Protection and the industry to try to bring forward new initiatives to make this a very valuable sector.
There is much pressure there to fill vacancies. I would rather we did that with people who are already living in Ireland or certainly within the EU. At the moment, there is an awful lot of pressure to bring people in from beyond the EU to work in these roles. If we all put our minds together to bring forward initiatives, we should be able to deal with that through quality training, expertise and skills development, as well as recognising that the opportunity to use innovation in the sector to be able to deal with some of the roles. It is hard work and people are fully switched on. You are on your feet and fully switched on in the hospitality sector, similar to retail. We need to recognise that as well. That is why it is important that while we have the conversation on the minimum wage, we are on that journey to a living wage. That is something we will all agree with here. I am glad the Tánaiste has prioritised that in our work.
Similar to the Sick Leave Bill, this Bill is part of making sure that work always pays. In this case, it is to recognise that if you earn a tip or gratuity, that you get it and it is not taken off your wages. That is what this is about. To be very clear, it would prohibit employers from using tips and gratuities to make up contractual rates of pay. This ensures the tips and gratuities are additional to a worker’s contractual earnings. It also makes sure the key objective is that workers will be entitled to receive tips and gratuities paid in electronic forms, such as by debit or credit card, even though Senator Buttimer will still use cash. That is fair enough and I am the same as him. The Bill requires that these tips and gratuities should be distributed in a fair and transparent manner. If there is a dispute, the Workplace Relations Commission, WRC, can adjudicate on whether the approach taken by an employer is fair and transparent. That piece is key. The WRC had observations on previous Bills and it was very clear and it fed into this one as well. That is why some of the amendments are trying to make sure the WRC can do its work to police this.
Lastly, the Bill will require businesses to clearly display their policy on how tips, gratuities and mandatory charges are distributed. This transparency is to the benefit of employees and customers and to the good employers who do it right.
I would have assumed, to be honest, having worked in the sector, that people knew that a service charge was not necessarily a tip or gratuity. I discovered during this Bill and over the past year’s debates on this that most people thought the opposite and assumed that it was a tip that the staff were getting. I am delighted and proud that this legislation is clarifying that. Having been in the sector, I knew what it was. However, I discovered the majority thought they were actually giving people a tip and recognising quality service. It is important that is clarified as well. I thank the Senators for the time. We have more amendments to go through, so I do not want hog it.
The Minister of State made a point that I think that is something that we, as a Government, should work on. The Minister of State is being very proactive and progressive in the work permit area as is the Minister for Further and Higher Education, Research, Innovation and Science, Deputy Harris, in the whole area of apprenticeships. Yesterday the Minister, Deputy Harris, announced a new apprenticeship programme. He specifically mentioned chefs and executive chefs. The Minister of State made the point about these jobs being a career. The whole issue of post leaving certificate, PLC, courses, further education and apprenticeships is one that we should have a serious debate in this House on and how we can use them as a pathway to a sustainable career for people in the hospitality sector. I know the Minister, Deputy Harris, has broadened apprenticeship programmes. We have seen the PLC courses being expanded and the different levels under FETAC. In the context of the apprenticeship scheme, perhaps after the summer, we should have a debate about how we make the hospitality sector, in particular, a sustainable career for people who want work in that sector on a long-term basis.
I appreciate that is a bit of a mouthful, but we will try to deal with as much as we possibly can. Amendment No. 3 proposes that “mandatory service charge” be renamed “mandatory charge”. This reflects our decision to refine our approach to service charges and transparency. Again, the Tánaiste committed reviewing this since the Second Stage debate here in February.
The definition will remain the same, but our view is that, in fact, the charges concerned do not have a clear and direct link with the service provided by employees. As we already discussed, where a business describes something as a service charge, that creates a customer expectation that the charge is directly for the benefit of the staff. The definition of “mandatory service charge” is broad and this was always intended as an anti-avoidance mechanism. The direct link to service was always quite limited. This change facilitates the policy adjustment we already discussed, restricting the use of the term “service charge” in certain context. Amendments Nos.10, 13, 40, 58, 60, 70 and 72 are consequential amendments to ensure the term “mandatory charge” will be used throughout the Bill.
On the service charge in other sectors, just to be very clear, it is important to note the provisions of the Bill will not apply to all sectors. They will be applied by means of ministerial regulation where it is appropriate to do so. They will be applied only to areas where tips and gratuities are a regular feature and where there is significant customer uncertainty as to what a service charge is for. Nothing will change for utility bills, for example, because nobody expects a service charge for broadband to be like a tip or gratuity. I think we are all on the same page here. We are focusing on hospitality and that is what we are talking about here. The regulations are there to reflect that.
If the Chair wants me to go into the other amendments tabled, I can deal with them all.
The new section 4B contained in the Payment of Wages (Tips and Gratuities) Bill 2022 requires employers to distribute fairly and in a transparent manner tips that are received in electronic form, that is, through debit or credit cards. It also provides that employers may not retain any share of tips or gratuities received by the employer electronically, unless such retention is required or permitted by law.
Employers who regularly do the same kind of work as their employees may also retain a fair and reasonable share of electronic tips, proportionate to their work. This is the policy already set out in the Bill, but this amendment better clarifies that intent. I hope it is clear to everybody what we are trying to achieve there.
Section 4B(1) is broadly in line with section 5 of the Payment of Wages Act 1991. There is no offence provision under section 5 and therefore there should also be also no offence provision in respect of section 4B(1). This is a technical amendment, but I can assure Senators that it does not prevent appropriate enforcement action by the WRC.
An amendment is required to section 4C(b) to clarify, by reference to section 4B, that the prohibition on an employer making a deduction only applies to employees’ electronic tips. The only deductions from electronic tips that will be permitted by section 4C(b) will be those required by law or the fair or reasonable costs associated with processing payment of tips or gratuities made by electronic means. I think that is fair and accepted.
While employers will be required to include detail on how cash tips are dealt with when displaying their policy towards tips and gratuities, there will be no other regulation of cash tips. The Workplace Relations Commission advises that this would be unenforceable due to the lack of an evidential trail in respect of cash tips. The WRC has to be able to do its job to enforce this. There has to be legislation that has enforcement as well.
Senators Higgins and Black have jointly proposed amendments that would require mandatory service charges to be treated exactly the same way as tips and gratuities. Senator Gavan proposed amendments also intended to achieve this. The Government amendments are a safer and surer way of achieving this aim. I hope that is accepted in good faith. The reason for this is that the definition of “mandatory service charge”, or “mandatory charge”, as we will now call it, was deliberately very broad. When the policy was that there would be no change at all in relation to mandatory charges, this was to support the transparency aims of the Bill. It made sure that the notices required under the Bill would have to explain the purposes of each of those charges and that is still the case. However, if we require the distribution of all charges, we will need to consider whether that definition is fit for purpose. It will cover items such as function charges for weddings or similar events where extra staff are required to provide an adequate level of service or cover charges where a band is also playing. The Government amendments are sufficient to address the reasonable expectations of customers and staff and are not unduly onerous for employers. I would ask that the Senators accept our amendments and not press their own, because I think we are achieving the same thing. However, I will hear the Senators’ views on that. At this stage, perhaps I will hear the Senators' comments and then come back in on the rest.
I thank the Minister of State for going through that. There was quite a lot to go through. With regard to mandatory services charges, as I have said I am very happy to accept the Government's amendments. I do not mind and I am not precious about which amendments get the job done. I acknowledge the fact there has been engagement on this. We have what I regard as a good result on the mandatory service charge issue.
I want to take issue with several other amendments that fall into this broad category. This is where the Minister of State and I will disagree. We should have included cash tips. They were included in my original Bill. Amendments Nos. 19 and 22 do speak to this. We should do this because we know abuse has been carried out. Our research showed that one in three tips were being withheld. I acknowledge the fact that more and more we are moving towards electronic payments and certainly Covid has hastened this. Where cash payments are involved we should be able to include them. This is why we are pushing the amendments. It is important for the staff concerned.
I could cite several examples but I will not delay matters. I will cite the example of people working in a hostelry in Connemara where the first drink was free when the tourists came in. Of course the tourists were delighted and tipped on this basis. The employer pocketed all of the tips because in effect that is how the drinks were being paid for. The staff who served those drinks were not getting a cent. This is one of several examples I could spend the rest of the evening going through. I acknowledge what Senator Casey said and there are many good employers. However, there are some awful abuses relating to cash payments in particular. This is why it is important that the Bill could and should look at including them.
Amendment No. 48 is on a curious point that Senators Higgins and Black have also spotted. The amendment wants to delete a part of the Bill that allows an employer to deduct money from an employee to meet costs directly arising from paying tips or gratuities by means of electronic modes of payment. I find this strange. The Minister of State knows that most packages for electronic card and contactless machines are already paid for by the employer. They are paid for so that customers can pay for goods and services. I am sure covering the cost of these machines is factored into the cost of the goods and services sold by the employer. To allow an employer deduct moneys from an employee to pay for these machines is unfair. It is a strange and convoluted situation. If we have the opportunity to fix this we should do so. There is no justification for allowing employers to make this charge. I am somewhat concerned that it could be open to abuse.
I pay tribute to Senator Gavin on his Bill and to the Government for running with this Bill. The service charges issue is a rare example of the Government taking on board a point raised on Second Stage and introducing an amendment. I welcome this. I am delighted Joe Cunningham, Fiona Dunne and Clem Shevlin are present. It is through their campaigning that we have the Bill.
Senator Casey made some very important points on the sector. The Bill has to be the start and not the end of the conversation on what happens in the sector with regard to pay, training and careers. The Government, employers and workplace representatives must have this conversation. There are significant benefits from the much-needed VAT reductions for hospitality employers in many parts of the country. We need a conversation about how we get better sustainable pay and conditions in the sector.
I want to speak on amendments Nos. 44, 46 and 48. Amendments Nos. 44 and 46 aim to tighten up the ban on the deduction of employees' wages in respect of tips and ensure the Bill also covers cash tips. I heard what the Minister of State had to say on the Workplace Relations Commission and enforceability. Setting out in legislation very clearly that the ban must also include cash tips is very important. There is a gap in section 4C that bans tips and gratuities being used as justification to deduct from wages as it does not specifically mention or clarify that service charges are part of this. The Bill is about sending out a message and clarity with regard to service charges. As the Minister of State said, most people would be horrified to realise their service charge does not necessarily go into the pockets of those serving them. These are important amendments.
Senator Gavin has spoken on amendment No. 48. An employer does not charge an employee for the paper or ink used to produce the wage slip or the method an employee is paid. It is unacceptable that the burden of transaction fees with regard to the transfer of tips to workers would be placed on the workers themselves. It is unfair to ask low-wage workers in particular, and we are speaking about low-wage workers, to bear this cost. Will the Minister of State consider amendment No. 48?
I will focus on the point on cash tips and I will speak from a practical point of view. It is almost impossible for an employer to regulate them. I have been on both sides of this. I have been through many schemes in many establishments. There have been schemes to pool tips and distribute them throughout the services or pool and distribute them among the waiting staff only, and there have been situations where people keep their tips. In most situations the employer never sees the cash. The cash is almost always given to a waiter or waitress. Very seldom is it given to the employer.
Every establishment has different arrangements for tips, particularly cash tips, and how they are distributed. Most of it is decided by the staff themselves and how they want to distribute the cash tips and whether they want to keep them themselves. I will give the example of one establishment where I tried to introduce pooling tips, whereby they would be divided proportionately based on what part of the service people were involved in. Everybody signed up to it and everybody agreed. The first month went very smoothly but the pool of money gradually got smaller and smaller. It did not work. We are discussing an employer trying to manage, reconcile and distribute cash when he or she has no interaction with it. For bigger functions, where one person pays a bill and leaves a tip, it might be different. When people walk into a restaurant for dinner tomorrow night they will not hand their tip to a manager or the employer. They will hand it to a member of staff. They have the cash. It would be very difficult. I know what the Senator is trying to do and I do not disagree with it but practically on the ground trying to manage it would be almost impossible. On the other side, we would also be leaving a trail for Revenue to follow and I will leave it there.
I will try to deal with this as best I can. Senators are keen to extend the Bill to cover all cash tips and gratuities. I understand this. We would all like to do this but it is exactly as Senator Casey has said. It is about what is possible to trace and manage in law.
With respect, I cannot disregard what the Workplace Relations Commission recommends to us. It is the body that will be charged with policing the legislation we introduce. I assume we want legislation that is workable and enforceable. We are all on the same page in that we would like to be able to do it but it has to be enforceable or else it will be legislation that is not worth bringing in.
The Workplace Relations Commission is a body we all respect and engage, with and we have asked it to police this. I assume we are all happy that it does its job extremely well. If not, that is a different story but I believe it does in general. This is the issue we have. There is a general prohibition on making deductions from any employee but there is no accompanying penalty. The Bill is clear that it is an offence but there is no penalty because we cannot police it.There is no point in kidding ourselves on that. It has to be legislation that is enforceable or else the rest of it will not be worth the paper it is written on. The reason for this is simple. Cash left voluntarily simply is not traceable. We will not have any evidence on which to base enforcement provisions. Electronic payments create an evidential trail that can be examined if there is a complaint.
We have to recognise that most payments, except maybe those of Senator Buttimer and a few others, are now being made electronically.
Senator Buttimer need not worry. I am only slagging. I am the same.
I see it in practise. Many people pay their bill electronically and then pay the tip in cash separately. The issue we would have, exactly, as Senator Casey said, is how the Workplace Relations Commission would trace the case. This legislation has to be workable and enforceable if we are to achieve what we want to achieve.
We should recognise that most payments are being made electronically and fewer and fewer people are using cash on a regular basis. We make a significant proportion of our purchases, including in person, through electronic transactions by debit or credit card, e-wallets, etc.
I want to assure Senators that in a case where a customer pays a bill which includes a mandatory service charge by cash, that mandatory service charge has an evidential trail and the WRC can consider a complaint. That is clearly on one's bill. One would be able to see that. We can and will trace that. We will pursue that as well.
I hope the Senators accept that it is in good faith. It is not trying to avoid anything. It is merely that it has to be enforceable.
We are committed to a review after a year. After six months, the Senator may come back telling me that we are completely missing something here and it is being completely abused. I do not think it will be. This legislation will work because everybody has contributed to it over a long number of years. It is the right legislation. It will work to what we are trying to achieve.
In relation to the electronic means, I spoke earlier about the amendments to clarify by reference that employers will be required to include details on how cash tips are dealt with when displaying their policy towards tips and gratuities. That policy is there for everyone to see and read. There will be no other regulation of cash tips because we cannot enforce it.
The WRC advises it would not be enforceable. It has been clarified in this legislation. It held the same view on Senator Gavan's legislation in 2017. It stated it was neither workable nor enforceable. I did not want to raise that earlier on but that was the technical difficulty with it. The WRC said that we would not be able to enforce it. There is no point in bringing forward legislation that we cannot stand over.
In relation to what is allowable for an employer to deduct out of tips paid electronically, to be clear, there is no question of paying for payment infrastructure out of the tips. It is not a case of paying for the machine at all. It is the fee charged for processing payments, bank transfers, etc., that is to be looked at. There are real costs here and it is not necessarily fair that the employer should take on those extra costs. In some cases, there could be other costs associated with legislation and that is allowed for as well. However, it is not to pay for the machine that is there anyway. It is additional costs that would not normally be there if they were not processing the tips through electronic means. We can clarify that more for Senator Gavan in regulation, if the Senator wants. I am happy to discuss the regulation with the Senator when we are doing that. That is what we are trying to achieve here so that no one is out of pocket.
The people are entitled to get their tips without doubt. If it is a service charge, that is what it is there for. People wanted them to have that but we also recognise that one cannot put extra cost on the employers. It goes back to the point that in most cases it is not necessarily a high margin industry. Of course, there are always some who will do well but the majority are covering all their costs, making a reasonable wage and want to continue with the business as well. We want to see the hospitality sector thrive and survive and more jobs created in it as well. It is not to put any extra costs on them. It is to make sure that people are getting what the customers thought they were giving them in the first place.
I will be brief because I want to see this Bill progress this evening.
I want to come back on one point to respectfully correct the Minister of State. What the WRC said in relation to my Bill was that it may not be enforceable, which is the same as saying it may be enforceable. The Minister of State can check that for himself. That is what is on the record.
Here is my point. Without covering cash tips-----
As a Westmeath man to a Meath man, I would never suggest that. To be clear, there was certainly ambiguity in terms of that. I remember it at the time.
Here is the point. If we do not include cash tips in some way, it means there is no recourse in any circumstance in relation to cash tips. We can do better than that. I will not delay matters but I will give one example from Limerick. Actually, it is the example that kicked off this whole conversation where a number of staff explained to me how at the end of the night the employer would simply put his hand into the jar and say either that it had been a slow night or that he did most of the work that evening, and help himself to the cash tips. When one bears in mind that the Workplace Relations Commission makes decisions on the balance of probability, it would be quite possible in that case for the WRC to come to a decision that something wrong has happened here and these people deserve recompense. I would ask the Minister to revisit this when the Bill goes before the Dáil if possible. We should go further to try and ensure in circumstances such as that which none of us approve of - we all think it is horrific - that there is some course to see how we can deal with that.
If the Senator has some magic formula, I am happy to look at it when the Bill comes before the Dáil. There is no doubt about that. Of course, we all would like to achieve that. I must be black and white on this. If the WRC tells me something is unenforceable, I have to accept it. It is the body we will be asking to police this. We want this policed. I am assuming we are here bringing legislation that we think will be policed and enforced and I have to work with the WRC on that.
By all means, when the Bill comes before the Dáil, if we find the magic formula that achieves what we all want to achieve, we can look at it. If it needs to be in regulations or anywhere else, we can do that.
We looked at it and we do not have that magic formula. To be honest, Senator Gavan is not giving me the magic formula and it was not in the Senator's previous Bill either which the WRC said was unenforceable. I am not trying to rewrite history-----
-----but I am working with a WRC which tells me that, because it is cash and because we cannot trace it, it is unenforceable.
We have to also recognise where we are today. Although I do not have the percentages, I understand the majority are paying with card. It is a minority who are paying their restaurant bills with cash. If the Senator has any statistics on that, we would be happy to look at them. I repeat we have a built-in review.
We want the same thing but I cannot recommend legislation that is not workable. I have to be honest about that.
Before Senator Seery Kearney starts, I welcome Deputy Stanton to the Upper House, along with his niece, Fiona, and her friend, Paul. They are both welcome to the Seanad today. It is great to have the three of them here.
It is unenforceable but it is possibly indefensible also. How does one prove that something happened or did not happen when it comes to cash? One could potentially leave an employer open to false allegations that he or she could not defend whereas at least in other provisions in employment law the onus is on the employer to prove it. They would not be able to prove that tips came or did not come. I can see how it would be unenforceable.
I move amendment No. 4:
In page 4, between lines 10 and 11, to insert the following:"(c) mandatorily made to an employer, or to a person engaging contract workers, by a customer, in the form of a mandatory service charge;",".
I move amendment No. 5:
In page 4, between lines 10 and 11, to insert the following:"(c) mandatorily made to an employer, or to a person engaging contract workers, by a customer, in the form of a mandatory service charge, in circumstances in which a reasonable person would be likely to infer that the customer intended or assumed that the payment would be distributed to an employee, a group of employees or to a contract worker;",".
I move amendment No. 42:
In page 7, line 30, to delete “class C” and substitute “class A”.
I think this is the only point where the Minister of State and I are going to disagree. I disagree fundamentally because I am genuinely puzzled as to why it is only a class C fine, as in a fine of €2,500, that can be applied. Let us be honest here that contravention of sections of this Bill equate to employers stealing money from their workers. We have seen such instances uncovered time and time again through WRC investigations. Often one sees it labelled in the media as "recovery of unpaid wages". That is a nice way to spin stolen wages but that is what it is. In the last decade alone, nearly €18 million in stolen wages was returned to workers after WRC investigations. Indeed, this disgusting practice has been escalating in recent years, with nearly €9 million being recovered for workers in the period 2018-20. The withholding of wages is especially rampant in sectors where women and migrant workers are heavily employed, those being the food and drink, retail, nursing and childcare sectors. These are the same sectors where one would expect tips, gratuities and service charges to be left by customers for workers.
There are two ways to combat this unscrupulous practice, that is, to further resource the WRC to investigate more places of work and to ensure the punishment matches the crime. For this reason I propose to amend the legislation to increase the punishment for contravention of sections within the Bill from a class C fine of €2,500 to a class A fine of €5,000. We need to send a very clear message with this Bill that stealing employees' money is wrong and must be punished. We need to send a clear message because the Minister of State's own Government's figures, through the WRC each year, show we have a scandalous amount of stolen wages each year. In the last three years alone it is €9 million. These are wages stolen by employers from their employees.
With the greatest of respect, a €2,500 fine is not going to fix that. I know we are going to get this Bill done this evening and that the Minister of State is not going to agree with me but I urge him to have a look at this when the Bill reaches the Dáil. We cannot tolerate people's wages being stolen. Let us be clear that no-one can dispute this. The facts are in. The figure is €9 million for the last three years. Are we seriously suggesting a €2,500 fine is sufficient when people's wages are being stolen? We cannot.
I emphasise the second point, which the Minister of State and I have had a back-and-forth on before, that is, the WRC is consistently under-resourced. Again, that is a political choice being made by this Government. We need a significant ramping up of labour inspectors. I hope the Minister of State takes my points on board.
I thank the Senator for his amendment. He is right that I cannot accept it. I will explain why in a moment. There are two things I agree with. One is the whole area of a deterrent. The greatest deterrent is that one might be caught, more so than the fine itself or the punishment, in our view. That is my understanding of criminal legislation and legislation like this as well.
I also agree with the Senator that the WRC has not proper resources to do its work. We have worked with it over the last couple of years to increase the resources available to it as well. There have been issues and delays in attracting the staff we need, or sourcing them, but I have committed before, as has the Tánaiste, to dealing with the extra resources required there. Extra money has been allocated but we will continue on that journey because the Senator is right there must be enough inspectors within the system to let people know they are going to be caught and have them be afraid of being caught. That is the greatest deterrent above any fines. We agree on that one as well.
The Senator's amendment would change the penalty for breaches from a fine of up to €2,500 to a fine of up to €5,000. This would be far out of line with the penalties included in the Payment of Wages Act 1991 that this Bill amends. That Act provides for fines of up to €1,000. The WRC can also impose a fixed penalty notice of up to €1,500. If these amendments are accepted then breaches of this Bill would have the most serious consequence of any offence under the Payment of Wages Act 1991 and this would not be proportionate.
I appreciate what the Senator is trying to achieve but in the overall legislation we are amending it would not be proportionate, so I cannot accept this amendment. However, the Senator and I discussed, I think on Committee Stage of the Sick Leave Bill, that the overall level of fines is something we need to look at in general across all the legislation. Rather than doing it piecemeal or accepting one amendment here that then distorts the overall payments Act, I agree with the Senator we should look at legislation in general to see whether the penalties are enough of a deterrent. As I said, I believe the chance of being caught is more important than the penalty itself but we should look at the penalties across the system. It affects more than one Department but I am happy to be part of that work. I commit that we take a look at that in general to see if we can make a better impact if we have larger fines in general. However, it should be a general conversation as opposed to individual pieces of legislation here and there, or amendments, because then the overall thing does not have a proper logic.
I hope the Senator accepts I genuinely think we should do that but we cannot accept this amendment because it would not be proportionate.
I appreciate what the Minister of State has said. I will be pressing the amendment but I hear what he is saying. I ask that he give that commitment to review the fines within the next 12 months or something like that so we can get something concrete out of this. The very fact we have seen €9 million stolen in the last three years shows - and in fairness the Minister of State has acknowledged it - that the current set of fines is not sufficient. I ask for a timeline so we can get something concrete from the conversation. I very much welcome the Minister of State's comments.
I am not going to give a timeline because I cannot. It would be unfair because I need to consult Ministers and other Departments but I have listened to the Senator tonight and on other Stages, and listened to others as well, and it is something we should do. I certainly take on implementing that across Government but I cannot commit colleagues or the whole of Government to a timeline I want or that the Senator wants. I will come back to him with a timeline. It is something we should do and I will ensure it happens but I just cannot say how long it will take until I assess it.
Amendments Nos. 52 to 57, inclusive, 59, 61, 64 to 69, inclusive, and 71 and 73 are related. Amendments Nos. 54 and 55 are physical alternatives to amendment No. 53. Amendment No. 57 is a physical alternative to amendment No. 56. Amendments Nos. 66 and 67 are physical alternatives to amendment No. 65. Amendments Nos. 69 is a physical alternative to amendment No. 68. Amendments Nos. 52 to 57, inclusive, 59, 61, 64 to 69, inclusive, 71 and 73 may be discussed together by agreement. Is that agreed? Agreed.
Amendment No. 77 extends the power of a Workplace Relations Commission inspector under section 27 of the Workplace Relations Act 2015 to businesses and places used by prescribed persons who engage contract workers at or through their premises. Section 27 normally applied only to places in connection with an employment relationship. This is necessary to allow the enforcement of section 4F with regard to contract workers.
Amendment No. 78 is a technical amendment to ensure all the necessary cross-references to the Payment of Wages Act, as amended by the Bill, are included in the Workplace Relations Act 2015. It will ensure the WRC can issue fixed penalty notices where a business fails to provide a written statement of tips and gratuities distributed or does not display a tips and gratuities notice or a contract worker's tips and gratuities notice, whichever applies in the circumstances.
Amendment No. 79 is also a technical amendment to ensure appropriate references to the Bill made in Schedule 5 of the Workplace Relations Act 2015. It ensures that complaints and employer is making unauthorised deductions from employees' tips or gratuities can be adjudicated by the WRC. I hope the amendments can be accepted.
I thank all of the Members for their support for the legislation and their genuine approach. We are all trying to make the legislation better and the amendments do this. We may have had different wording but the same intent was behind all of the amendments proposed on all sides and we are at one. If there are any issues that we can deal with in the Dáil, we will certainly do so. I am happy to engage further with Members. I thank the House for its assistance in getting the legislation through so that we can bring it through the Dáil before the session finishes for the summer.