- Pubs do not withhold tips and employers should not be permitted to
- Employers oppose their involvement in tronc schemes
The introduction of ‘tronc schemes’ under new legislation could result in service staff actually having their income reduced, according to the Licensed Vintners Association (LVA).
Under the Protection of Employee Tips Bill, it is proposed to introduce a tronc scheme, which is effectively a common fund for the pooling of customer tips. The proposed legislation suggests that such a system would be established with employer involvement.
However the LVA is concerned that this would result in tips being made taxable at source and would require employers to withhold income tax on tips. Potentially this could have a negative impact on employee – employer relationships, if employees then felt they were missing out on income due to the increased tax management responsibilities facing the employer.
The LVA believes that the current in pub distribution scheme of tips is well established in the licensed trade and works well.
While this specific aspect of the legislation could result in difficulties, the LVA supports the broad principle behind the legislation. It is the LVA position that employers should not be allowed to withhold tips from employees.
Speaking about the legislation, LVA Chief Executive, Donall O’Keeffe said, “Dublin pubs operate in the service sector. Anyone familiar with that sector knows that tips are expected for excellent service. This model is in the interest of employees and business, as it illustrates that customers are happy with their experience.
“This is the system that has long operated for the licensed trade in Dublin and it is a practice that works well. We are certainly against any employer withholding tips from their employees and support the main thrust of the legislation which seeks to stop any employers who would seek to withhold tips. That is not something we have come across in our sector. Dublin pubs are happy to see the collection of tips by their employees. Such practice promotes better customer care as well as employee satisfaction.
“Tipping is primarily a transaction between customers and customer service staff. Employers generally do not have any involvement and that should remain the case.
“This is why we are concerned about the potential introduction of a tronc system as outlined in the proposed legislation. Simply put that could make employers responsible for withholding income tax for sums generated through tipping, while also adding to the administrative burden of employers. It could be a measure which counteracts the overall purpose of this legislation and that’s something no one wants to see,” Mr. O’Keeffe concluded.