Employer Advice for Managing Employee Tips and Gratuities in Alberta

In Alberta, tips and gratuities are not considered wages and, therefore, they are not regulated by the Employment Standards Code (ESC). Employers must develop their own policies on how to manage employee tips and gratuities.

Tips can be an important factor in an employee’s income and employers should be considerate of this if they want to retain staff and avoid high turnover rates. Here is some advice for employers to follow regarding tips and gratuities in Alberta.

Should employers keep employee tips?

Some provinces, like Ontario, have legislation that prohibits employers from making deductions, withholding or asking employees to return their tips. While this may not be the case in Alberta, employers should nevertheless adhere to similar standards as a best practice.

Employees in service industries rely on tips to supplement their income and this may be an important factor in their job choice. Furthermore, employees who receive tips for their good service may feel that it is unfair to not get to keep the money they worked for. Withholding tips can lead to dissatisfaction among employees, resignations and a poor workplace atmosphere.

Tip Pooling and Redistribution

There are different ways of ensuring employees receive their tips and tip pooling is one popular option among employers. Tip pooling ensures support staff like hosts and bussers receive a portion of servers’ tips through tip collection and redistribution. This method allows servers to receive tips and ensures that other workers involved in customer service are compensated as well.

Regardless of the employer’s decision, their policy on tips and gratuities should be set out in their employment contract. This policy should specify how tips will be managed and who they belong to.

Want more advice on managing employee tips and gratuities?

Speak with our HR experts to get help with employee pay, drafting employment contracts and developing policies on tips and gratuities. We can answer your employment questions and help you keep your business compliant with provincial legislation. Call us today: 1 (833) 247-3652