A Tip for Employers? New Rules for Tip-Earners in Ontario

Tips in Ontario’s service industry are currently divided up in a variety of ways: they can be kept by the specific employee who receives them, pooled to share with other employees, or pooled to share with other employees and the employer. An act entitled Protecting Employees’ Tips Act, 2015 amends Ontario’s Employment Standards Act to prohibit employers from taking a share of tips.

Passed yesterday, the Act will take effect in six months. While there will be a few situations in which employers may be permitted to share in tips (such as when the employer regularly performs the same work as the employees), the general rule will ban sharing tips with employers. For those in a unionized environment, current collective agreements that provide for tip sharing with an employer will be grandfathered in, but when the collective agreement is renewed the Act will apply to prohibit employers from receiving a share of the tips.

Employers should prepare by making sure the policies at their workplace do not violate this upcoming prohibition. Tips withheld improperly will be enforceable as though they are unpaid wages owed to the employee.