A Mississauga restaurant has been ordered to pay two former servers more than $16,000 after the Ontario Labour Relations Board found it failed to prove it had a proper tip distribution policy and improperly allocated roughly one-third of the tip pool to management.
The tribunal ruled Sultan Ahmet Turkish Cuisine violated the Employment Standards Act by distributing tips as fixed monthly amounts rather than based on actual tips received, failing to disclose that managers were receiving tip distributions, and allowing the owner to share in tips despite not performing hands-on restaurant work to a substantial degree.
The two servers worked at the restaurant from September 2023 to August and September 2024, earning $17.50 per hour plus bonuses and tips. Each sought payment for overtime, public holiday pay and tips through employment standards complaints. An employment standards officer issued orders for overtime and holiday pay but declined to order payment for tips, prompting the workers to apply to the tribunal for review.
Fixed payments instead of actual tips
The tribunal found the restaurant operated a system where servers who worked 170 hours per month received either $1,500 or $1,700 in tips, regardless of the actual amount of tips they received.
“This formula fails to consider the amount of money an employee might receive in tips during the month in question,” the tribunal stated. “Under this mechanism, the pool is distributing revenue and not tips.”
The tribunal noted that monthly tip distribution figures showed the restaurant regularly failed to balance tips collected with tips distributed, though the amounts were close to balancing at year-end. The restaurant did not provide sales journal information showing daily tip amounts or other documentation to verify its figures.
One server testified he generated average hourly revenue of $399.54 during one month while working 200 hours, suggesting he received substantially more than $1,500 in tips from customers.
Management received one-third of tip pool
According to the restaurant’s charts, four individuals collectively received $130,037.20 from the tip pool between September 2023 and September 2024, representing roughly one-third of the $399,407.51 in total tips collected.
The owner and a head chef each received $40,000, while two other managers received $27,000 and $23,037.20 respectively.
Both servers testified they did not know until April 2025 that management employees were receiving distributions from the tip pool. The restaurant admitted it did not post a copy of its tip-sharing policy as required by legislation that took effect June 21, 2024.
“The Board finds that it is more likely than not that the Restaurant did not disclose that managers were receiving tip distribution until the pre-hearing phase of this application,” the tribunal stated.
Owner ineligible to receive tips
The tribunal found the owner was not eligible to share in tips because he did not “regularly perform to a substantial degree” the same work as tipped employees, as required under the act.
While the owner testified he initially worked as waiter, busser, bartender, host and dishwasher when the restaurant opened in December 2022, he later focused on hiring staff, managing social media, creating a franchise program and other management duties.
One server testified he never saw the owner waiting on tables, though he witnessed him collecting plates once or twice when short-staffed. The owner typically arrived at 5 or 6 p.m., sometimes set tables, checked food orders and dealt with complaints, but also spent time working on his computer or talking to friends.
Three-step remedy
The tribunal calculated the awards using a three-step process: reconciling discrepancies between recorded and actual payments, fulfilling the restaurant’s promised $1,500 pro-rated formula, and redistributing the amounts improperly allocated to managers.
The tribunal found one server actually received $454 less than the restaurant’s records claimed, while the other received $2,216.85 less.
After the calculations, the tribunal awarded $7,193.32 to one server and $9,065.97 to the other.
The restaurant was directed to pay these amounts to the director of employment standards within 30 days, failing which administration fees would be added.
The tribunal emphasized that employers seeking to rely on tip-sharing exemptions bear the burden of proving strict compliance with the act, particularly given their unique position as “paymasters.”
For more information, see Teko v Sultan Ahmet Turkish Cuisine Inc., 2026 CanLII 5555 (ON LRB).
