Can my employer prevent me from accepting tips?

This blog was originally published in the Globe and Mail on December 19, 2023

Many workers rely on tips to supplement their wages, particularly given today’s inflationary pressures and the high cost of living. In Ontario, the Employment Standards Act provides certain protections for workers who receive tips. Employers are prohibited from withholding or making deductions from tips, and from requiring employees to give their tips to the employer. The narrow exceptions to these rules are where a court orders otherwise, or where the employer establishes a “tips pool” to collect tips and redistribute them among employees. 

The rationale behind these protections is to ensure that tips flow through to employees without being improperly taken by employers. However, these protections do not extend to a situation where an employer explicitly prohibits employees from accepting tips in the first place. While such a policy is unusual, it would not be illegal. It may be designed to protect a vulnerable client population such as seniors or persons with disabilities receiving services in their home. Or it may be part of an employer’s business model to seek a competitive advantage by offering services with no hidden charges, including tips. 

Given that the policy preventing tips is not illegal, an employer can fire an employee for breach of the policy. Knowingly breaching employer policies has been held in some cases to be just cause for termination. In Ontario, a breach that rises to the standard of wilful misconduct that has not been condoned permits termination without any notice or severance. Such cases are highly context-specific, and the heavy burden to prove serious misconduct is on the employer. However, even if just cause is not met, provincially regulated employees in Ontario can generally be fired without cause upon being provided lawful notice and severance. 

An approach may be to disclose this situation to the employer prior to accepting any tips, and to request a formal exemption from the policy or some other mutually agreeable solution.

The above is provided as general information only. Questions related to terms of employment may involve complex legal issues. Contact us today if you would like to consult with our lawyers.