The Ontario government just passed
a law to provide protection for servers and other employees
who commonly receive tips. Under Bill 12, Protecting
Employees' Tips Act, an employer is prohibited from
withholding, making deductions from or causing an employee to
return his or her tips or other gratuities.
The definition of "tips and
other gratuities" includes voluntary payments made directly or
indirectly to an employee where it is reasonable to infer that the
customer intended that the payment would be kept by the employee or
shared with other employees. It also includes payments of a service
charge or similar charge where it is reasonable to infer that the
customer intended or assumed the payment would be redistributed to
an employee or employees. This would include, for instance, a
mandatory gratuity that a restaurant may impose on large groups.
Excluded from the definition are charges as may be prescribed
relating to method of payment used, or a prescribed portion of
The Bill includes provisions for the
pooling and redistribution of tips between employees. However, it
prohibits business owners, directors or shareholders from taking a
cut of the redistributed tips unless these individual regularly
performs a substantial degree of the same work as the employees or
work that an employee would commonly receive tips for based on
The Bill does not prohibt an employer
from making deductions from tips where otherwise required by law,
for instance, with respect to applicable statutory deductions for
For unionized employees, if there is
a conflict between the Bill and pre-existing collective agreement
provisions pertaining to tips and gratuities, the collective
agreement will prevail until the parties negotiate a renewal
These changes come into effect on
June 10, 2016. Employers in industries where employees receive tips
should review their current policies and practices to ensure that
they are in line with these new changes. Employers should note that
the Bill does not change the definition of "wages" in the
Employment Standards Act. As such, there is still
no obligation to consider an employee's tips when calculating
termination and severance pay.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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