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Do I get to keep tips that I get from customers at work?

If you work some place where people leave tips, like a restaurant or a hair or nail salon, you get to keep the tips people give you. That's the general rule in the Employment Standards Act (ESA).

But there are 2 exceptions to this rule:

  1. Your employer can decide that tips go into a "pool" for sharing. If tips are shared, your employer can decide what share of the pool you get.
  2. Another law or a court order could say that your employer does not have to let you keep your tips. For example, a court order could say that your employer has to take money out of your wages and tips to pay money that you owe, like child support.

When employers can share in the tips

If your employer decides that tips go into a pool for sharing, they usually do not get a share for themselves.

But if an employer owns all or part of the business, they can share in the tips if they regularly do a lot of the same work as:

  • workers who are sharing the tips, or 
  • workers in the same industry who normally get tips.

For example, a restaurant owner who spends a lot of time serving food is allowed to share in the tips.

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Next Steps: 

1. Find out if Ontario’s laws about wages apply to you

Ontario's Employment Standards Act (ESA) has minimum standards that employers must follow. This includes rules about wages.

Use the Ministry of Labour's online tool called Industries and Jobs with Exemptions or Special Rules to find out if your job is covered by the ESA and which parts of the ESA apply.

You can also call the Ministry's Employment Standards Information Centre at 1-800-531-5551, 416-326-7160, or 1-866-567-8893 (TTY).

Federal laws

Some industries are covered by federal laws. These are laws made by the Government of Canada and they apply throughout the country.

These industries include banks, airlines, some trucking businesses, and broadcasting.

Workers in these industries are covered by the Canada Labour Code. Like the ESA, the Canada Labour Code sets out minimum standards employers must follow.

If you're covered by the Canada Labour Code, some of the pay rules under the ESA apply to you. For example, the minimum wage rates.

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2. Find out the minimum wage for different jobs

In the Employment Standards Act (ESA), tips are not counted as wages.

So even if you get to keep money from tips, your employer still has to pay you minimum wage.

There is more than one minimum wage. The Ministry of Labour has information about different minimum wage rates.

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3. Learn the rules about income tax and tips

Keep track of the tips you get, whether you keep your own tips or get a share of tips from a "pool". Since tips are part of your income, they're supposed to be included on your income tax return.

If your employer puts tips in a pool and decides what share of the tips you get, they have to include the amounts on the T4 statement that they give you. You use the information on the T4 statement when you do your annual income tax return.

Otherwise, you're supposed to report tips yourself when you do your income tax.

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4. Consider your options if your employer does not follow the rules about tips

If your employer does not follow the rules about tips, you might be able to get the money they owe you by making a claim with the Ministry of Labour.

You have up to 2 years to make a claim from the date the employer owed you the money.

June, 2016

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