Restaurants sign VAT-cut pay deal

Five restaurant workers' unions have reached a pay deal with management - six months after a VAT rate cut was introduced that should have improved conditions for staff.

In a meeting with catering bosses and the labour ministry yesterday, the unions accepted a €500 "VAT bonus" - up from the €400 originally proposed. This will be given every year to all staff who have worked for the business for more than four months - down from the nine months suggested at first.

To benefit from the cut from 19.6% to 5.5%, restaurant and cafe owners were supposed to sign up to a contrat d’avenir, agreeing to drop the price of at least seven key menu items and improve conditions for staff.

The government had threatened to scrap the reduced 5.5% tax rate - which came into effect in July - if restaurants did not keep their side of the deal.

Two unions agreed to a pay and holiday entitlement increase last month, but yesterday's deal is the first that has been accepted by the majority of the industry.

Catering bosses are due to meet ministers later today for a six-month catch-up on how the VAT rate cut is working - during which they will be reminded of the need to pass some of the tax cut on to the customer.