Service charge set to be banned from receipts unless staff get cash

Employers are set to be banned from using the term “service charge” on receipts unless the money goes directly to the staff member which is set to impact the hospitality industry.

Tanaiste Leo Varadkar is expected to make a change to his new tips law which will have an impact on workers’ tips and provides clarity to customers on what they are being charged for. Mr Varadkar said: “Our overall objective with the bill is to prevent employers from using tips or gratuities to make up basic wages and to introduce transparency about how tips and service charges are distributed.

“Customers really can’t be sure what services charges are used for or whom they go to. Voluntary services charges are clearly the same as a tip or a gratuity but by definition, mandatory service charges are not.

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“As things stand, you’re expected to pay, without any information on where the money goes. “I’m happy we’ve been able to come up with a solution now, which will effectively ban employers from using the term ‘service charge’ or any similar term, unless the money goes straight to staff.

“Employers must be explicit about any additional charge and where it goes, once this new law comes into force.”

Customers often reasonably assume service charges go to staff when that may not be the case. Fine Gael’s junior Minister for Business, Employment and Retail, Damien English, will introduce the changes in the Seanad on Wednesday.

These will rename “mandatory service charges” as “mandatory charges”, and prohibit classes of employer prescribed by regulations made by the Minister from describing a mandatory charge applied to customers as a “service charge” or any similar term, for example ‘service levy’ unless those payments are treated by the employer in the same way as electronic tips or gratuities. Any additional charges that are not going to staff, must be explicit on receipts.

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