Keeping Tips in the Servers’ Pockets – New Protections Under the Employment Standards Act

Apr 12, 2016

For servers, tips generally form a significant part of their income. Pooling tips is a common practice in the restaurant industry whereby a server is required to contribute a certain portion of his or her tips into the “pool”. The tips are then redistributed to other employees. In some cases, the restaurant also takes a cut of those tips, which can seem unfair.

Under Bill 12, Protecting Employees’ Tips Act (“the Act”), which amends the Employment Standards Act (“ESA”), as of June 10, 2016, an employer is prohibited from withholding, making deductions from or causing an employee to return his or tips or other gratuities.

What are tips and gratuities?

Under the Act, “tip or other gratuity” means:

  • A voluntary payment left for an employee by a customer of the employee’s employer whereby a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees
  • A voluntary payment made to an employer by a customer whereby a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees
  • A payment of a service charge or similar charge imposed by an employer on a customer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be redistributed to an employee or employees

New Tip Pooling Rules

An employer is permitted to pool tips and redistribute the tips to other employees, but the employer is not allowed to share in those tips; meaning that the employer can no longer take a cut of a server’s tips or gratuities. There are exceptions for sole proprietors, partners, directors and shareholders if they regularly perform to a substantial degree the same work performed by:

  • some or all other employees who are part of the tip pooling;
  • employees of other employers in the same industry who commonly receive or share tips or other gratuities.

If servers are unionized employees and these new protections conflict with the current collective agreement, the collective agreement will prevail until the expiry of that collective agreement.

If you have any questions about what your employer can and cannot require you to do with your tips, please contact us at [email protected] or 647-204-8107 and one of our lawyers would be happy to assist you.

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