If a customer taps a card machine to leave a tip, that money is not yours to keep or to pool however you like. Since 1 December 2022, Irish law has set out exactly how electronic tips and service charges must reach your staff - and the Workplace Relations Commission (WRC) can issue on-the-spot fines when they don't.
Here is what the Act requires, in plain terms, and what you need displayed on your wall before an inspector ever walks in.
Key takeaways
- The Payment of Tips Act took effect on 1 December 2022. It governs how electronic tips, gratuities and service charges are shared with staff. Cash tips are largely left alone (Workplace Relations Commission, 2022).
- Electronic tips must be distributed in a fair manner, and you cannot retain a share of them (bar narrow exceptions) or use tips to top up contractual pay.
- A mandatory service charge must now be treated like a tip and passed to staff - it can no longer be kept as general business revenue.
- You must clearly display your tips policy and give staff a statement of what they received.
- Getting it wrong carries a €750 or €500 fixed payment notice from the WRC (Arthur Cox, 2024).
- New for 2026: the CCPC has told venues to keep card-terminal tip prompts separate and clearly labelled so customers don't tip by accident (RTÉ, 2026).
What is the Payment of Tips Act, in one paragraph?
The "Payment of Tips Act" is the common name for the Payment of Wages (Amendment) (Tips and Gratuities) Act 2022. From 1 December 2022 it introduced new rules on how employers share tips, gratuities and service charges with employees (Workplace Relations Commission, 2022). It applies mainly to electronic tips - anything paid other than by cash, such as a card tip, a tipping app or a push-notification tip. Workers are legally entitled to receive those electronic tips, and they must be distributed in a fair manner. Cash handed straight to a staff member is not regulated the same way, but you still have to say in your policy how cash tips are dealt with.
Tip vs service charge vs mandatory charge - what's the difference?
This is the distinction that catches owners out, so it is worth getting precise.
A tip or gratuity
A voluntary amount a customer chooses to add for good service. When it is paid electronically (card, app), it falls squarely under the Act and must be shared with staff in a fair manner. Cash tips go to staff directly and sit largely outside the rules.
A service charge
Here is the change most people miss. Under the Act, any charge called a "service charge" - or anything that would lead a customer to believe it is a charge for service - must be distributed to staff as if it were an electronic tip (Workplace Relations Commission, 2022). You can no longer add a 10% service charge to a large table's bill and treat it as ordinary turnover. The WRC is blunt about this: it is an offence to use a term like "service charge" that leads customers to believe the money goes to staff if you do not actually distribute it.
A mandatory service charge
A mandatory service charge is a contractually imposed, receipted payment the customer must pay on top of the price of certain goods or services. It is still a service charge under the Act, so it still has to reach your staff. The label does not create an exemption - if it reads to the customer like payment for service, it is treated as a tip.
What must you actually do as an owner?
Four duties sit at the centre of the Act. None of them is onerous, but all of them are enforceable.
- Distribute electronic tips fairly. Electronic tips and gratuities must be shared out in a fair manner. The Act doesn't dictate one formula, but your method has to be genuinely fair and consistent with the policy you display.
- Don't retain tips or use them to top up wages. You cannot retain any share of electronic tips, save for narrow exceptions such as statutory deductions and card-processing costs. And you cannot use tips or gratuities to make up contractual rates of pay - tips are on top of wages, never part of them.
- Display your tips policy. You must clearly display your policy on how tips, gratuities and service charges are distributed, including how cash tips are handled. If you use contract workers to deliver services, there is a separate contract workers' tips and gratuities notice to display too.
- Give staff a statement. You must provide workers with a statement showing the amount of tips received in a period and the portion paid to each individual for that period.
Think of it as three artefacts an inspector can ask to see: your distribution policy on the wall, your staff statements, and a consistent record of how electronic tips and any service charge were shared.
The compliance side overlaps with your wider staff obligations. If you are tidying up tips, it's a good moment to run through the broader Irish restaurant employment law compliance checklist at the same time - contracts, core terms and payslips all live in the same area of the WRC's remit.
What's new in 2026?
In January 2026, the Competition and Consumer Protection Commission (CCPC) issued guidance on what it called "tipping and tapping". The watchdog urged restaurants, cafés and other service providers to make tipping policies transparent so customers don't inadvertently pay over the odds, and reminded them of their obligation to prevent accidental tipping by keeping tipping terminals separate and clearly labelled (Irish Times, 2026).
The reason is a real one: the CCPC pointed to research showing one in four consumers who had met a standalone tipping terminal had tapped it by mistake (RTÉ, 2026). As the CCPC's Simon Barry put it, "Transparency is vital. Any mandatory service charges must be flagged well in advance," and tipping terminals "should be placed away from payment terminals to avoid any confusion" (Irish Times, 2026).
The practical reading for your venue: label the tip prompt clearly, keep it distinct from the "pay now" step, and make sure any mandatory charge is flagged on the menu and the bill - not sprung at the terminal.
What happens if you get it wrong?
Enforcement runs through the WRC, which can issue fixed payment notices - on-the-spot fines - rather than going straight to court. The amounts, set by the Workplace Relations Act 2015 (Fixed Payment Notice) Regulations 2023 (published 12 January 2024), are (Arthur Cox, 2024):
- €750 where an employer fails to give employees a written statement on the distribution of tips, or fails to treat a service charge as a tip.
- €500 where an employer does not display a tips and gratuities notice or a contract workers' tips and gratuities notice (Mason Hayes & Curran, 2024).
You have 42 days to pay a fixed payment notice. If you don't, prosecution can follow, and on summary conviction the underlying offence carries a Class C fine - currently up to €2,500 (Arthur Cox, 2024).
Does anyone actually get caught? Enforcement has been light so far. By mid-2024, about 18 months after the rules took effect, the WRC had issued just one fixed payment notice under the legislation - to a Dublin employer that failed to display a tips and gratuities notice (Irish Times, 2024). That is not a reason to be complacent. With the CCPC now shining a light on tipping transparency, the simplest insurance is to get the notice up and the policy clear before you are the test case.
One soft bridge worth making: fair, visible tip handling is also a retention tool. Staff who trust that their tips reach them in full are easier to keep - which feeds directly into the wider job of reducing staff turnover in your restaurant. And if your own ordering or booking page shows a clear, up-front line on service charges and tipping - rather than leaving it to a card-terminal prompt - customers aren't surprised and you stay on the right side of the CCPC's transparency steer. A simple website you control (an AI builder like DineHere is one way to get one quickly) makes that charges-and-tipping page easy to keep accurate.
Frequently asked questions
Does the Payment of Tips Act apply to cash tips?
Largely no. The Act regulates electronic tips - card, app and similar. Cash tips go directly to staff and aren't regulated in the same way. But you must still state in your displayed policy how cash tips are handled (Workplace Relations Commission, 2022).
Can I keep a share of card tips to cover processing fees?
You cannot retain any share of electronic tips except in narrow cases, which can include deductions such as card-processing charges. Keep it genuinely cost-based and transparent in your policy - you cannot use "fees" as a route to top-slicing tips.
Is a service charge mine to keep as revenue?
No. A service charge - mandatory or otherwise - must be distributed to staff as if it were an electronic tip. It can no longer be treated as general business income (Workplace Relations Commission, 2022).
Can I use tips to make up staff wages to the minimum wage?
No. You cannot use tips or gratuities to "make up" contractual rates of pay. Tips sit on top of wages and must not be counted towards meeting your pay obligations.
What exactly do I have to display?
A clear policy on how tips, gratuities and service charges are distributed, including how cash tips are dealt with. If you use contract workers, display the separate contract workers' tips and gratuities notice as well. Failing to display costs a €500 fixed payment notice.
How should I distribute electronic tips fairly?
The Act requires a "fair manner" but doesn't prescribe one formula. A points or hours-based pool that is written down, applied consistently and matched to your displayed policy will stand up far better than ad-hoc decisions.
What are the fines for getting it wrong?
€750 for not giving staff a written statement on tip distribution or not treating a service charge as a tip; €500 for not displaying the required notice. Both are fixed payment notices from the WRC, payable within 42 days (Arthur Cox, 2024).
What changed with the CCPC's 2026 guidance?
Nothing in the Act itself. The CCPC's January 2026 guidance is about consumer transparency - keep card-terminal tip prompts separate and clearly labelled, flag mandatory charges in advance, so customers don't tip by accident (Irish Times, 2026).
Do I need to give each staff member a payslip-style tips statement?
You must provide workers with a statement showing the tips received in a period and the portion paid to each individual for that period. Many operators run it alongside payroll so there is a clear, dated record.
Where can I get definitive guidance for my venue?
Start with the WRC's own tips and gratuities page and its information guide. For your specific policy, pooling method or a disputed charge, take advice from the WRC or a solicitor - this guide is owner orientation, not legal advice.
