Quick answer: Ontario employers generally cannot withhold, deduct from or make an employee return tips and gratuities unless a specific legal exception applies. Employers may operate a lawful tip pool, and limited owner or manager participation is allowed only when they regularly perform substantially the same work as tipped employees.
What counts as a tip?
Tips include voluntary payments a customer leaves for an employee and service charges that a reasonable person would believe will be distributed to employees. Cash, debit, credit-card and app-based tips may all be covered.
Can an employer deduct credit-card fees?
An employer cannot simply deduct an arbitrary percentage from employee tips. Any deduction or withholding must fit a legal exception. Workers should compare the tip report, point-of-sale totals and payout records.
How tip pools work
An employer may collect and redistribute tips among employees. A written policy should explain which roles participate, the allocation method and payout schedule. A tip pool cannot be used as a hidden way to pay ordinary business expenses.
Can managers or owners share tips?
Participation is limited. An owner, director, shareholder or partner may share only when they regularly perform substantially the same work as some or all employees who share in the distribution.
Tips and minimum wage
Tips do not replace the employer’s obligation to pay at least the applicable minimum wage. They are separate from regular wages.
If tips are missing
- Record each shift and reported tip amount.
- Save tip-out sheets and pay statements.
- Ask for the pool policy and calculation.
- Raise discrepancies in writing.
- Review Ontario employment standards options.
Read the official Ontario tips guide and our student minimum wage guide.
General information only; not legal or tax advice.
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