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Redistribution of Gratuities - Act Part 3, Section 30.4

Last updated on August 14, 2026

Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information

Summary

This section sets out how an employer can redistribute tips in a tip pool. Employers may not share in tips unless they do similar work to the employees who receive the tips.

Text of Legislation

Redistribution of gratuities

30.4  (1) Despite section 30.3 (1), an employer may withhold gratuities from an employee, make a deduction from an employee's gratuities or require the employee to return or give the employee's gratuities to the employer if the employer collects and redistributes gratuities among some or all of the employer's employees.

(2) An employer must not redistribute gratuities under subsection (1) among prescribed employees or classes of employees.

(3) Subject to subsections (4) and (5), an employer or a director or shareholder of an employer may not share in gratuities redistributed under subsection (1).

(4) An employer who is a sole proprietor or a partner in a partnership may share in gratuities redistributed under subsection (1) if the employer regularly performs to a substantial degree the same work performed by

(a) some or all of the employees who share in the redistribution, or

(b) employees of other employers in the same industry who commonly receive or share in gratuities.

(5) A director or shareholder of an employer may share in gratuities redistributed under subsection (1) if the director or shareholder performs to a substantial degree the same work performed by

(a) some or all of the employees who share in the redistribution, or

(b) employees of other employers in the same industry who commonly receive or share in gratuities.

Policy Interpretation

Subsection (1)

Employers can require employees to pool their tips and share them with certain other employees. Aside from the rules in subsections (3), (4) and (5), the Act does not restrict which employees may share in tip pools or impose any rules about what proportion of tips are distributed to which employees.

Subsection (2)

The legislature may specify certain classes of employees who are not entitled to share in pooled tips. There are not currently any classes of employees that are excluded from sharing in pooled tips. Managers are employees who may share in pooled tips depending on the employer's policies.

Subsection (3) and (5)

A director or shareholder of a corporate employer is not allowed to share tips unless they do the same type of work as the employees who are given tips, or the same type of work as the employees who share in the tip pool.

Subsection (4)

An individual employer (a proprietor or a partner in a business) is allowed to share tips if they regularly do the same type of work as the employees who are given tips do, or if they regularly do the same type of work as the employees who share in the tip pool do.

Example

An employer requires all employees who receive tips to put 15% of tips received into a pool. The pool is disbursed to all employees who do not receive tips at the end of each shift according to a formula set by the employer. This activity does not contravene the Act.

Example

An employer requires all employees who receive tips to put them into a pool. The pool is distributed on a monthly basis to all employees. The formula the employer uses to distribute the pool is: 

  • 40% tips to the servers
  • 10% tips to the bartender
  • 10% tips to the dishwashers
  • 20% tips to the cooks
  • 10% tips to front of house
  • 10% tips to managers

This does not contravene the Act.

Example

An employer requires all customers to pay an additional 20% service charge on top of their regular bill. The employer collects these service charges and places them in a pool for re-distribution. The pool is distributed on a bi-weekly basis to all employees. The formula the employer uses to distribute the pool is:

  • 50% to front desk, concierge, bell hop and guest experience employees
  • 20% to servers
  • 20% to housekeeping
  • 10% to managers 

This does not contravene the Act.

Example

An employer requires all tips paid through credit or debit cards to be put in a tip pool. At the end of each month, after paying for dine-and-dash meals, and for spillage and breakage, the employer distributes the residual to all employees. This activity is a contravention of the Act.

Employees covered by a collective agreement

Section 3 provides that parties to a collective agreement may not negotiate terms and conditions that do not meet or exceed the standards set out in section 30.4. Where there is a collective agreement, the enforcement of matters relating to section 30.4 is through the grievance procedure, not through the enforcement provisions of the Act.

Related Information

Related sections of the Act or Regulation

ESA