How much workers take from tips can vary from one company to another, industry experts say. (Elevate / Pexels.com)
Consumers may feel tip fatigue due to various factors, including high living costs and frequent tipping prompts. However, understanding where the tips go is crucial. According to Marc Mentzer, a professor at the University of Saskatchewan, tips in restaurants often undergo pooling, where all servers contribute to a shared pool managed by the establishment.
Another practice, tipping out, mandates servers to share a portion of their tips with non-tipped staff like kitchen workers, typically amounting to four to six percent of sales. This practice is widespread across Canada, except in Quebec. Moreover, house tipping is legal in some provinces, permitting managers or owners to take tips as personal income, with varying regulations on the amount they can claim. Keerthana Rang from Uber Canada confirmed that Uber Eats delivery drivers and Uber drivers retain 100 percent of their tips, with Uber not deducting any fees from them.
Jocelyn Rhindress from the Canadian Federation of Independent Business delineates two tipping categories recognized by the Canada Revenue Agency (CRA): controlled tipping and direct tipping. Controlled tipping involves tips processed by employers, including those through debit machines or pooled tips.
Employers can only deduct from tips under specific circumstances like court orders or statutory deductions for income tax, Canada Pension Plan, and Employment Insurance. Direct tipping occurs when employees directly receive cash from customers, bypassing employer interaction and giving employees full control over these earnings.
Mike von Massow, a food economist from the University of Guelph, emphasizes that tipping is a societal convention rather than a legal requirement, underscoring the importance of consumers ensuring their intended recipients receive the tips. Ultimately, Rhindress asserts that tipping decisions should remain within the purview of consumers, emphasizing their responsibility to determine who receives tips and in what amounts.
