After almost one and a half years since its first reading, Bill 12, the Protecting Employees’ Tips Act, 2015, finally received Royal Assent on December 10, 2015 after getting unanimous support from the Ontario legislature.
Although not a long one, this bill should have a tremendous impact on those employees who receive tips and gratuities through their employment. Bill 12 will amend the Employment Standards Act, 2000 (“ESA”) by adding in Part V.1, entitled “Employee Tips and Other Gratuities”.
The new part is aimed at prohibiting employers from withholding, making deductions from, or collecting tips or other gratuities from employees, as set out in section 14.2. “Tip or other gratuity” is broadly defined in section 14.1 as:
- A payment voluntarily made to or left for an employee by a customer of the employee’s employer in such circumstances that a reasonable person would be likely to infer that the customer intended or assumed that the payment would be kept by the employee or shared by the employee with other employees,
- A payment voluntarily made to an employer by 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,
- 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, and
- Such other payments as may be prescribed.
One important enforcement mechanism for a contravention of this new part is how “the amount withheld, deducted, returned or given” will be deemed to be a debt owing to the employee that can be claimed under the ESA as if it were “wages”. This is significant, as under the existing ESA, “tips and other gratuities” are specifically excluded from the definition of “wages”.
Even though these changes will not come into force until June 10, 2016, for those employees covered by a collective agreement in which a provision dealing with the collection and payment of tips or other gratuities already exists, it is this agreement that will prevail until a renewal comes into effect. Where such a provision does not get renegotiated during the parties’ next set of negotiations, the new rules in Part V.1 will then prevail over the collective agreement.
The pooling of tips is dealt with as an exception under the new part; nevertheless, the intention of these amendments is to help employees who earn tips and other gratuities to be able to keep them, and that is no different for pooled tips. The bill does not, however, allow employees to keep that portion of their tips associated with fees relating to method of payment, such as fees payable by an employer for those customers who pay by credit card.
As most of us know, gratuities can be a significant part of an employee’s income – for example, think of servers, hairstylists and masseurs. These amendments to the ESA will allow these individuals to keep what they have earned while making it harder for their employer to take a cut.