Do I get vacation pay on my tips in Ontario?
The short answer
Example
You’ve worked at the same restaurant for two years. In your last vacation entitlement year you earned $24,000 in hourly wages and $30,000 in tips (amounts illustrative).
| Counts for vacation pay? | Amount | |
|---|---|---|
| Hourly wages | Yes | $24,000 |
| Tips, from customers or a pool | No | $30,000 |
| Vacation pay at 4% | 4% × $24,000 = $960 | |
| At 6% (after five years) | 6% × $24,000 = $1,440 |
The $30,000 in tips adds nothing. If your pay stubs show vacation pay on each cheque, check it against 4% of that period’s wages, not of wages plus tips.
Not tax or legal advice. Amounts are made up for the example.
Plain English
What Ontario says
The ESA guide sets vacation pay at “at least four per cent of the gross wages (excluding any vacation pay) earned in the 12-month vacation entitlement year,” and six per cent for employees with five or more years. Its list of what those wages “do not include” names “tips or other gratuities,” next to discretionary bonuses, expenses and severance pay. The tips chapter adds: “Tips or other gratuities are not considered wages for the purposes of the ESA.”
The ESA’s definition of a tip also covers a service charge the employer adds when a reasonable person would believe it goes to staff. Those amounts fall in the same “tips or other gratuities” category.
How much time off
- Two weeks of vacation after each 12-month vacation entitlement year, if you’ve been there less than five years.
- Three weeks once you have five or more years.
When vacation pay is paid
- The default: a lump sum before you take the vacation it was earned for.
- Or on every pay cheque as it builds up, if you agreed in writing or electronically. The amount has to be shown separately on your wage statement, or on a separate statement.
- When the job ends, unpaid vacation pay is due within seven days or on what would have been your next pay day, whichever is later.
Quebec is different
In Quebec, the labour standards law counts tips you declare to your employer and tips it allocates to you in the gross wages vacation pay is calculated on. Our French page covers it: Indemnité de vacances et pourboires au Québec.
Common mistakes
- Expecting 4% of your wages plus tips. In Ontario it’s 4% of wages only.
- Missing that the rate goes to 6% once you pass five years with the same employer.
- Not checking vacation pay that’s paid on each cheque. It should be listed on its own line.
- Forgetting to ask for unpaid vacation pay when you leave a job.
Official sources
Last verified:
Checked the vacation and tips chapters of Ontario’s guide to the Employment Standards Act, and the CNESST interpretation of Quebec’s article 74 for the Quebec comparison.
Still open: The guide doesn’t say whether vacation pay could be owed on tips your employer runs through payroll; it excludes tips or other gratuities without distinguishing how they’re paid.