Service charge

Service charges on restaurant bills could be banned, Taoiseach warns

The imposition of service charges on restaurant bills could be abolished, the Taoiseach has hinted at the Dáil.

Icheál Martin said he was “inclined” to abolish an establishment’s legal right to add a service charge, usually 12.5%, to a bill in cases where there is no explicit obligation to pass them on to the service or kitchen staff.

The Taoiseach said it should be a case where the consumer would ‘hand over directly to the employee or group of employees’ where they wanted to tip for the service.

He was responding to a question from TD Independent Socialist Joan Collins about the pay win for two Ivy restaurant waitresses at the Workplace Relations Commission.

The couple had argued that they had been fired for union activity.

Ms Collins used the Dáil privilege to repeat their allegations that Ivy had used customers’ tips – in the form of service charges – to make up the difference between minimum wage and their contract salary.

Mr Martin said he believed the public viewed service fees as going to the workers, ‘and in many cases that is not the case’.

Admitting he was “inclined to abolish” the standard service charge, he said: “I think we need absolute transparency.

“Ideally, in fact, I think it’s the consumer who should give (the money) directly to the employee or a group of employees.”

It was about finding out how the mechanisms could be facilitated, “as a kind of additional contribution if consumers want it”.

The Tánaiste is currently piloting digital transaction legislation, he said, and it would create a right to retain tips for “people who frequent restaurants or otherwise,” Martin said.

But he added that the whole area “must absolutely be clarified”, including the status, if any, of service charges.

“In the context of the legislation that is pending in the House, I know the Tánaiste is keen to clarify this and make it as transparent as possible.”

Everything “should be simplified in relation to the reality on the ground”, he said, suggesting amendments would be made to the bill.

But he added: “There is a balance to be found here in terms of competing rights and practical issues. As well as in terms of employment.

“This is a matter that we will keep under constant watch. Trade union activity in itself should not be subject to dismissal.