Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar has published a new law which will give customers clear information on where their tips and service charges go.
The law will also prohibit the use of tips to 'make up' contractual rates of pay.
The Payment of Wages (Amendment) Bill will require employers to clearly display their policy on how tips, gratuities and service charges are distributed.
It states that all electronic tips received by the employer must be distributed 'fairly' and in a 'transparent way' and this will be inspected through the Workplace Relations Commission (WRC).
The distribution obligations will not affect businesses where tips are managed by employees themselves, for example under a ‘tronc’ system.
It states that an employer may take into account certain factors when deciding how to distribute tips, including the seniority or experience of an employee, the value of sales generated by them and the number of hours worked.
All employees must be consulted on the policy that is introduced.
"The vast majority of employers do their best to ensure tips are distributed fairly among staff," the Tánaiste said.
"This law will make sure that is the case across the board, giving employees a new legal right over their tips," he added.
Mr Varadkar said an important requirement of the new Bill is that the employer must provide a statement to workers showing the amount of electronic tips obtained in a period and the portion paid to the individual employee for that particular period.
"This will ensure transparency," he said.