Employment Law for Bartenders, Waiters and Waitresses

Bartenders, waiters and waitresses, or “Liquor Servers” as they are referred to in the Employment Standards Act (“ESA”), are given special treatment under the law and by the Ontario Courts. While many of the ESA’s provisions apply equally to all types of employees, there are some important distinctions for liquor servers that hospitality employees and employers should know. This article is meant to highlight some of those important differences.

Minimum Wage

As of January 1, 2018, minimum wage for most workers in Ontario was increased to $14.00 per hour. However, the ESA permits lower minimum wage rates for certain designated groups of workers who receive tips as a significant portion of their income. Liquor servers fall into this category. Since January of 2018, the minimum wage rate for liquor servers is $12.20 per hour.

While the terms “Liquor Server” or “Bartender” are not specifically defined in the ESA, the relevant section on minimum wage provides helpful insight into whether an employee’s minimum wage rate can legally be lowered to $12.20 per hour. The ESA states as follows:

Determination of Minimum Wage
23.1 (1) The minimum wage is the following:
1. On or after January 1, 2018, but before October 1, 2020, the amount set out below for the following classes of employees:
ii. For employees who, as a regular part of their employment, serve liquor directly to customers, guests, members or patrons in premises for which a licence or permit has been issued under the Liquor Licence Act and who regularly receive tips or other gratuities from their work, $12.20 per hour. [emphasis added]

Minimum Wage After October 2020

As suggested in the above section, after October of 2020, the minimum wage rate for liquor servers will increase in accordance with a formula based on the Consumer Price Index. This formula is as follows:

Previous Wage × (Index A/Index B) = Adjusted Wage

In which:

“Previous wage” is the minimum wage rate that applied immediately before October 1st of the year;

“Index A” is the Consumer Price Index for the previous calendar year;

“Index B” is the Consumer Price Index for the calendar year immediately preceding the calendar year mentioned in the description of “Index A;” and

“Adjusted wage” is the resulting new minimum wage rate.

Termination, Reasonable Notice, and Wages

Like all employees in Ontario, liquor servers are entitled to a certain amount of notice, or pay in lieu of notice, when their employment is terminated.

That being said, for liquor servers, more often than not a significant portion of their income comes in the form of tips. Therefore, the biggest question I get as a Toronto employment lawyer, from both employees and employers, is whether tips should be included as wages for the purpose of pay in lieu of reasonable notice. The answer to that questions depends significantly on whether the bartender or liquor server has a valid employment contract that limits notice only to those minimums under the ESA.

Under the ESA, Wages Do Not Include Tips

Under the ESA, generally when an employer terminates an employee who has been continuously employed for at least 3 months, the employer must provide the employee with notice, or pay in lieu of notice. This pay in lieu of notice is often referred to as “termination pay.” The amount of written notice required by the ESA is as follows:

Employment Period Notice Length
3 months – less than 1 year 1 Week
1 year – less than 3 years 2 Weeks
3 years – less than 4 years 3 Weeks
4 years – less than 5 years 4 Weeks
5 years – less than 6 years 5 Weeks
6 years – less than 7 years 6 Weeks
7 years – less than 8 years 7 Weeks
8 years or more 8 Weeks

If an employee, by an enforceable employment contract, is only entitled to the minimums under the ESA, then that worker may NOT be owed tips. Wages under the ESA are defined as:

“Wages” means:
(a) monetary remuneration payable by an employer to an employee under the terms of an employment contract, oral or written, express or implied,
(b) any payment required to be made by an employer to an employee under this Act, and
(c) any allowances for room or board under an employment contract or prescribed allowances,
but does not include,
(d) tips or other gratuities,
(e) any sums paid as gifts or bonuses that are dependent on the discretion of the employer and that are not related to hours, production or efficiency,
(f) expenses and travelling allowances, or
(g) subject to subsections 60 (3) or 62 (2), employer contributions to a benefit plan and payments to which an employee is entitled from a benefit plan. [emphasis added]

Without an Enforceable Termination Clause, Tips Are Owed as Part of Termination Pay

Without an enforceable clause in an employment contract which limits reasonable notice to only the ESA minimums, the Ontario Courts ignore the strict wording of the ESA and require employers to pay tips as part of wrongful termination pay.

We can see an example of this in the case of Giacomo Violo v. Delphi Communications, Incorporated. Violo had worked as a waiter and bartender for a small restaurant in Ontario for 29 years. At the time of his termination, he was 51 years old. The parties did not have an employment contract, and the restaurant contended that Violo had been legally terminated due to excessive tardiness, alcohol abuse, and discourteous behaviour. After examining the evidence, including work records from the defendant and testimony from current employees, the Court determined that “there was no cause for the plaintiff’s dismissal.” The Court then turned to the issue of determining the reasonable notice period Violo was due. After examining numerous factors, including Violo’s age and the availability of similar jobs at the time he was terminated, the Court determined Violo was entitled to a reasonable notice period of 15 months. The Court then addressed the issue of damages, noting that tips would be factored in as such wages constituted a significant portion of his overall income: “… in 2010 he claimed $9,025 in tip income, almost as much as his income from wages.” In total, Violo was awarded $45,250, representative of his base salary and tips over the course of the 15 month notice period.

Final Thoughts

For employers, it is important to have a valid written employment contract with all bartenders, waiters, and waitresses. While the amount of notice cannot be below the minimum amount required by the ESA, employers can fashion contracts which provide for less notice than the employee would otherwise be entitled to at common law. When it comes to employees who receive customary tips, this can mean a substantial difference in the amount of termination pay. If you need assistance drafting employment contracts, we strongly recommend that you speak to an experienced employment attorney for guidance and assistance.

For terminated employees who received tips as a significant portion of their overall income, it is crucial to remember that they likely have rights under the common law that are far greater than the rights afforded to them under the ESA. It may be best for liquor servers and waitresses to sue their former employer in court for “wrongful dismissal,” seeking additional damages which would include tips. If you have been recently terminated from a position where you received tips as part of your income, we suggest that you speak to an employment attorney to help you determine the best course of action for your situation.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btlegal.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

How to Change Employment Contracts

Anytime you ask an existing employee to sign a new employment contract, it’s important to proceed cautiously. There are risks and pitfalls that wary employers may wish to avoid when making a change to their employment contracts. A misgauged approach may result in an unenforceable contract, or worse, result in a costly claim of constructive dismissal.

As set out below, the Ontario Courts have clarified generally two methods to change employment contracts. The first method is for when an employee consents and agrees to the changes, and the second is how to change employment contracts when the employee refuses.

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Arbitration Clause in Employment Contract puts the Breaks on the Uber Class Action in Ontario

The Ontario Court has confirmed that an arbitration clause in an employment contract is generally enforceable.

Much to the chagrin of Mr. Heller and his lawyers in the proposed class action brought against Uber, Justice Perell of Ontario Superior Court of Justice stayed the lawsuit against Uber. As a result, Uber drivers in Ontario that want to sue for their rights under the Employment Standards Act, 2002 will need to do so by way of Arbitration in the Netherlands.

In the lawsuit of Heller v. Uber Technologies Inc., Heller, the proposed class plaintiff for Uber drivers across Ontario, sued Uber for a finding that they were employees, not independent contractors. If correct, then Uber drivers would be entitled to all the benefits granted to employees under the Employment Standards Act. Uber brought a motion to stay the action in Ontario—effectively ending the law suit—on the basis that when Uber drivers signed up on the “Uber App”, they clicked accept to a long list of terms and conditions that included the following clause:

Except as otherwise set forth in this Agreement, this Agreement shall be exclusively governed by and construed in accordance with the laws of the Netherlands, excluding its rules on the conflict of laws. The Vienna Convention on the International Sale of Goods 1980 (CISG) shall not apply. Any dispute, conflict or controversy, howsoever arising out of or broadly in connection with or relating to this Agreement, including relating to its validity, its construction or its enforceability, shall be first mandatorily submitted to mediation proceedings under the International Chamber of Commerce Mediation Rules (“ICC Mediation Rules”). If such a dispute has not been settled within sixty (60) days after a request for mediation has been submitted under such ICC Mediation Rules, such dispute can be referred to and shall be exclusively and finally resolved by arbitration under the Rules of Arbitration of the International Chamber of Commerce (“ICC Arbitration Rules”) …. The Place of the arbitration shall be Amsterdam, The Netherlands.

After finding that the International Commercial Arbitration Act, 2017, applies the Court considered:

  1. Whether the Competence-Competence Principle applied? or
  2. Whether there was some other reason to refuse to send the matter to arbitration.

The Competence-Competence principle holds that in general “a challenge to the arbitrator’s jurisdiction should be first resolved by the arbitrator.” The Court found that this principle did apply and that there were no exception to rely on that would benefit Mr. Heller. The Court held that the arbitration provision was not illegal for being unconscionable.

In short, Mr. Heller’s argument was summarized as follows:

it would be an absurd result and contrary to public policy to enforce an arbitration agreement in an employment contract and thereby deny vulnerable non-unionized employees their rights and protections under the Employment Standards Act, 2000, which precludes employees contracting out of their rights under the Act.

The Court reasoned that it was their role to interpret statute and not enact it and the Employment Standards Act does not, unlike the Consumer Protection Act, preclude arbitration clauses. Therefore, the Court held that the class action lawsuit should be stayed as a result of the arbitration clause in the employment contract, “be the result absurd public policy or not.”

What is the take away?

The decision of Heller v. Uber Technologies Inc., 2018 ONSC 718, confirms that Arbitration clauses in employment agreements are generally enforceable.


Contact Justin W. Anisman

Contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing. Call 416-304-7005 or email him at janisman@btzlaw.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning Zibarras LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

You might want to hire an employment lawyer before your next employee

Many Ontario employers think they’re saving money by copying an employment contract off the internet or hiring employees without one. What many believe to be a clever move soon realize it may have been a penny wise, but a pound foolish. A well written employment contract, as most might have guessed, often conveys significant advantages to employers. On the other hand, the absence of an employment contract or a poorly drafted one, often entitles terminated employees to significant common law notice periods.

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How much notice/severance should I get after being fired?

That’s a more complicated question then all of those “online severance calculators” make it seem. Before we delve into the factors which play a role, both employees and employers need a little context and exposition on how the Ontario wrongful dismissal system works.

Overview

Firstly, you need to understand that “notice” and “severance”, though often used interchangeably in common parlance, mean different things. Under the Employment Standards Act, severance pay is defined and is an amount of money an employer needs to pay an employee on termination if certain conditions are met. In addition to severance, employers must give notice of termination to employees.

Severance Pay

An employee is only entitled to severance pay if they have been employed for 5 years or more and:

  1. the termination occurred because of a permanent discontinuance of all or part of an employer’s business at an establishment and the employee is one of 50 or more employees who have their employment relationship severed within a six-month period as a result; or
  2. the employer has a payroll of $2.5 million or more.

If an employee is entitled to severance pay, they are to be paid severance in a lump sum amount equivalent to one week of non-overtime wages per completed year of employment up to a maximum of 26 weeks, within 7 days of termination.

Entitlements to severance are relatively well defined. It is the notice requirements of termination that require a more nuanced analysis.

Reasonable Notice of Termination

In Ontario, employers can give notice of termination to employees in two ways. Either,

  1. An employer can give notice ahead of time; or
  2. An employer can fire an employee right away, but provide “pay in lieu of notice” equivalent to what would have been earned over the notice period.

The first step in calculating the amount of notice depends on whether that employee’s termination is subject to a valid employment contract. If the employment contract contains a  clause that sets out the amount of notice an employee gets upon being fired and the contract is valid, then the employee is entitled only to the reasonable notice set out therein.  These contracts may be invalid or void ab initio (unenforceable from the beginning) for many reasons, including if they provide for less termination entitlements than the minimums established by Employment Standards Act.

If there is no contract, or the contract is not enforceable, then an employee is entitled to what the Ontario Courts call “reasonable notice”. Reasonable notice is always more than the minimum notice. The amount of  reasonable notice depends on many factors and is calculated by the Courts after considering all of the surrounding factors. Considerations include (1) age, (2) length of service, (3) character of employment and (4) availability of similar employment. Employees are entitled to more notice if:

  • they are older;
  • they worked somewhere a very short or a very long period of time;
  • their job was very specialized and it will be difficult to find comparable employment; or
  • the employer convinced them to leave another stable job.

An employee might also be entitled to further money on termination if the employer:

  • acted badly in the manner of termination;
  • fired you for a discriminatory reason;
  • fired the employee for insisting on his/her rights under the ESA;

Contact Justin W. Anisman

To contact Justin W. Anisman, the author of this blog, about any employment law related questions or issues you may be facing, call 416-833-8443 or email him at janisman@btzlaw.ca.

Justin W. Anisman is an Employment Lawyer at the Toronto law firm Brauti Thorning Zibarras LLP. Justin advises both companies and individuals in all aspects of employment law including wrongful dismissal, human rights and discrimination.


The publications made on this website are provided and intended for general introductory information purposes only. They do not constitute legal or other professional advice, or an opinion of any kind. Speak to a professional before making decisions about your own particular circumstances.

 

Important Upcoming Changes to the Ontario Workplace

On November 27, 2017, the Fair Workplaces, Better Jobs Act 2017 received royal assent and became Law in Ontario. Set out below are some of the most important changes to Ontario’s workplaces.

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