Tip and gratuity rules

A buyer of a business whose staff receive tips meets these rules in payroll and in the employment records. The CRA also lists certain tips and gratuities among pay that is generally pensionable. See how to check employment records in due diligence.

Ontario

Ontario’s Act says an employer shall not withhold tips or other gratuities, make a deduction from them or cause the employee to return them, unless authorized under that Part. Section 14.3 allows it where a statute of Ontario or Canada or a court order authorizes it, subject to subsection 14.3(2). Section 14.4 lets an employer collect and redistribute tips among some or all employees, but not to prescribed employees. An employer, director or shareholder may not share in the redistribution, subject to exceptions in subsections 14.4(4) and (5).

British Columbia

British Columbia’s Act says an employer must not withhold gratuities, deduct from them or require an employee to return them, unless a law of British Columbia or Canada or a court authorizes or requires it, subject to subsection 30.3(3). Despite that, section 30.4 allows an employer to collect and redistribute gratuities among some or all employees, other than prescribed employees. An employer, director or shareholder may not share in them, subject to exceptions in section 30.4. This entry covers Ontario and British Columbia only; check the rules where you are.