HR professional Damien McCarthy says the government has missed an opportunity to help the struggling hospitality sector after the introduction of the Payment of Wages Bill in the Seanad. .

The proposed law will make it compulsory for hospitality venues to pass on all gratuities and service charges directly to staff, and will prohibit counting tips as part of wages.

McCarthy, a co-founder of consultancy firm HR Buddy, noted that many businesses may have to consider shutting their doors or decreasing their operational hours during the peak summer season as bars, restaurants, cafes, B&B’s and hotels are struggling to staff up to meet demand.

“Many service industry workers choose part-time or casual work in hospitality roles because of the tips bonus, but this has been affected negatively as most tips are taxed because they are coming in electronically," he said.

"The worker is losing out and this key attraction tool that existed when we were a more cash orientated society in pre-pandemic times, is now gone.

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“The government could have supported the hospitality sector and their workers by making tips non-taxable. The excuse being given is that such a system would be open to abuse. However, if tips were receipted to the customer and then paid through payroll by the employer as a non-taxable payment, there would be traceability.

“It is unfortunate that this has not been considered as it would be an excellent way for the government to put monies into the pockets of some of the lowest-paid workers in society during a cost-of-living crisis. It would also have been a huge help to their employers as it would have acted as an attraction and retention tool for industries that need one.”

He pointed out that traditional workplaces like hospitality, construction and retail are struggling to compete in the labour market, given the attractive switch to remote, hybrid and flexible working.

“The hospitality sector lost some very valuable people because of workplace closures throughout the pandemic. Hospitality required an influx of non-EEA nationals to save the summer of 2022. However, with very little change made to the work permit system, it means that hospitality employers have not been able to recruit in time."

MCarthy (pictured) added: “As it currently stands, some hospitality employers cannot fully schedule a week’s roster without possibly breaking the law under the Organisation of Working Time Act.

“The hospitality and tourism sector needs support now more than ever — incentives to attract part-time workers, abolishing tax on service workers’ tips, and an overhaul of work permit rules are all considerations that should have already been dealt with.”