A new law designed to protect tips received by workers comes into effect today.
The Payment of Wages (Amendment) (Tips and Gratuities) Act will see employees given legal rights over the payment of tips.
The legislation will force employers to display their policy on mandatory charges and the distribution of cash and card tips.
Adrian Cummins is CEO of Restaurants Association of Ireland.
He said the new law is a positive step towards providing transparency for customers.
"We welcome the new legislation for tips, gratuities and service charge," he said.
"It gives more clarity for staff and for customers when they're dining out across the country.
"It's something that we have been advocating for as an organisation.
"Every restaurant or hospitality business will either have a notice to the public indicating that all tips, gratuities and service charge that is processed electronically will be passed on 100% to all staff.
"That's what businesses will have to do".
Mr Cummins said they do have concerns around any taxation of the tips.
"We will be saying to the Government that there is an unintended consequence around this, which is the taxation element," he said.
Solution to taxable tips
One recruiter has echoed these concerns.
Shane McLave of Excel Recruitment said there could be a solution.
"The premise underpinning this legislation is laudable - this act will provide guardrails to the payment of tips to employees," he said.
"However, the Government should have gone a step further and considered excluding income derived from tips, or a portion of it, from the tax net.
"All tips received by staff are currently taxable. However, given the often low-paid nature of the work - and the huge staff shortages which the hospitality sector is currently grappling with - more people could be encouraged to work in the sector if tips were not taxable, or if they could earn a certain portion of them tax-free.
"A case could be made for the fact that PAYE employers are already allowed to gift employees up to €1,000 in tax-free vouchers per year.
"This however is unlikely to impact the vast majority of bar staff, wait staff, hairdressers, beauticians and other professions who receive tips.
"A really progressive move could be to introduce a similar scheme for employers and employees in service industries, so that workers might be able to receive tips up to a certain threshold without incurring a tax bill," he added.
Reporting by: Claire McNamara
