Act respecting labour standards Chapter IV - Larbour standards (Section 39.1 to 97)

Gratuity

Any gratuity or tip paid directly or indirectly by a patron to an employee who provided the service belongs to the employee of right and must not be mingled with the wages that are otherwise due to the employee. The employer must pay at least the prescribed minimum wage to the employee without taking into account any gratuities or tips the employee receives.

Gratuity collected by employer

Any gratuity or tip collected by the employer shall be remitted in full to the employee who rendered the service. The words gratuity and tip include service charges added to the patron’s bill but do not include any administrative costs added to the bill.

The employer may not impose an arrangement to share gratuities or a tip sharing arrangement. Nor may the employer intervene, in any manner whatsoever, in the establishment of an arrangement to share gratuities or a tip sharing arrangement. Such an arrangement must result solely from the free and voluntary consent of the employees entitled to gratuities or tips.

Computation of indemnity

However, an indemnity provided for in section 58, 62, 74, 76, 79.7, 79.16, 80, 81, 81.1, 83 and 84.0.13 is computed, in the case of an employee who is an employee referred to in section 42.11 or 1019.4 of the Taxation Act (chapter I-3), on the basis of the wage increased by the tips attributed under that section 42.11 or reported under that section 1019.4.

1979, c. 45, s. 50; 1983, c. 43, s. 11; 1997, c. 85, s. 365; 2002, c. 80, s. 11; 2018, c. 21, s. 7.

Interpretation

A gratuity or tip is made up of sums voluntarily remitted by customers and the service charges added to the bill. The gratuity may be paid directly or indirectly to the employee. It is paid directly by the patron, to the employee, when it is given from hand to hand. It is paid indirectly when the employer collects it on behalf of the employee under either one of the following circumstances:

• the patron uses his credit card or debit card;
• the patron pays the employer the service charges added to the bill.

These amounts belong exclusively and "by right" to the employee who rendered the service to the patron. They do not belong to any other employee who did not render this service to the patron.

An employer is expressly prohibited from imposing on his own initiative the sharing of gratuities or tips on employees and from intervening in the establishment of a tip-sharing arrangement.

Gratuities or tips collected by the employer

When it is the employer who collects the gratuity or tip, he is under the obligation to remit the amount in its entirety to the employee who rendered the service. The employer cannot decide to keep a portion of this gratuity or to remit it, in whole or in part, to an employee who did not render the service to the patron.

Determining the wage to be paid

Whatever form the gratuity or tip takes, the employer must pay the employee the wages due to him, without taking gratuities or tips into account. Moreover, this wage must be at least the prescribed minimum wage, without taking gratuities or tips into account.

An employee who ordinarily receives gratuities or tips within the meaning of the definition of "employee who receives gratuities or tips" in section 1 RLS (in effect since June 26, 2003) may find himself paid, by the employer, as the minimum hourly wage, the specific rate set in section 4 RLS, without taking into account gratuities or tips. The minimum wage rate stipulated in section 4 RLS is only payable to an employee who receives tips or gratuities within the meaning of section 1 RLS. The interpretation of section 1 RLS specifies the definition of "employee who receives gratuities or tips".

Service charges and administrative costs

In addition to the sums remitted voluntarily by the patron, service charges, added to the patron’s bill, are deemed to be a gratuity. Hence, they must be remitted in their entirety to the employee. However, the administration fees added to this bill are not a gratuity or tip. Given the fact that the legislator has stipulated that service charges are deemed to be part of the gratuity, the employer is under the obligation to clearly identify what constitutes administration fees. When there is some doubt as to the nature of the administration fees charged to the patron, the employer will have the burden of showing that they fall within this category of fees and are not disguised service charges.

Tip-sharing arrangement

The employee to whom the gratuity or tip belongs within the meaning of section 50 is entitled to participate, on a free and voluntary basis, in a tip-sharing arrangement. The existence of such an arrangement may be verbal or written.

A group of employees may, for convenience reasons, decide to ask the employer to manage the application of this arrangement and the distribution of gratuities that ensue therefrom. A tip-sharing arrangement becomes a hiring condition for employees, if it arises from a desire freely expressed by the employees contemplated.

The Commission cannot claim the amounts not remitted under a tip-sharing arrangement for an employee who has withdrawn from such an arrangement. The Commission is not empowered to institute proceedings against an employee who does not meet his obligations towards the other employees concerned by the tip-sharing arrangement.

Indemnity on the wages increased by the gratuities or tips

The "gratuities attributed" under section 42.11 and "reported" under section 1019.4 of the Taxation Act are part of the wages for the computation of the indemnities stipulated in sections 58, 62, 74, 76, 79.7, 79.16, 80, 81, 81.1, 83 and 84.0.13 of the Act respecting labour standards (but not that of section 84.0.13 ALS). Gratuities and tips are also taken into account in the case of the indemnity for a non-working day with pay under a collective agreement or decree (s. 59.1, para. 2) ALS) and for that stipulated in the National Holiday Act. "Gratuities attributed or reported" within the meaning of the Taxation Act.

"Gratuities attributed or reported" within the meaning of the Taxation Act

The gratuity reported is one that the employee who receives gratuities reports, in writing, to his employer at the end of each pay period. The gratuity collected by the employer and remitted to the employee is also considered a gratuity reported, provided that the employer indicates these amounts in the payroll journal and makes the related tax deductions.The gratuities attributed refer to the attribution by the employer of an amount equal to the amount by which 8% of the total of the amounts of all tippable sales that are attributable to the employee exceeds the total of the amounts of each tip in respect of tippable sales (s. 42.11 of the Taxation Act). The employer must attribute gratuities when those gratuities reported by the employee are less than 8% of the amount of the sales that may give rise to the collection of a tip. The attribution must normally be made at the end of the pay period, namely when the employer calculates the employee’s remuneration.These notions only apply to an employee who performs his duties in a "regulated establishment", namely:

"

1. a place situated in Québec specially laid out where lodging or food for consumption on the premises is ordinarily provided in return for payment;
2. a place situated in Québec where alcoholic beverages are served for consumption on the premises in return for payment;
3. a railway train or a vessel, operated in connection with a business carried on entirely or almost entirely in Québec and on which food or beverages are served;
4. a place situated in Québec where, in connection with the carrying on of a business, food or beverages for consumption elsewhere than on the premises are provided in return for payment;"

"tippable sale" means a sale in a regulated establishment that, in keeping with the prevailing custom in Québec, is likely to entail tipping by the customer, but does not include a sale of food or beverages for consumption elsewhere than on the premises of the regulated establishment" (s. 42.6 of the Taxation Act).

"42.7. For the purposes of the definition of "regulated establishment" in section 42.6, a regulated establishment does not include:

1. a place situated in Québec where mainly lodging or food, or both, are provided by the week, month or year in return for payment;
2. place where the activity consisting in the providing of food and beverages is carried on by an educational institution, a hospital institution, a shelter for needy persons or victims of violence or any other similar establishment;
3. a place where the activity consisting in the providing of food and beverages is carried on by a charity or a similar organization but is not carried on a regular basis;
4. a cafeteria;
5. a fast food outlet in which the employees do not ordinarily receive tips from the majority of customers."