Board says there were ‘many anomalies’ in purported tip‑sharing system
The Ontario Labour Relations Board (OLRB) has ordered a Mississauga restaurant to pay more than $16,000 to two former servers after finding it failed to prove it had a lawful tip‑sharing policy, concluding that the employer improperly allocated a large portion of pooled tips to managers and its owner.
In a Jan. 26, 2026, decision, Korhan Teko v Sultan Ahmet Turkish Cuisine Inc., Vice‑Chair Brian Mulroney amended existing Employment Standards Officer (ESO) Orders to Pay to add $7,193 for former server Korhan Teko and $9,065.97 for Shamuhammet Jumageldiyev on account of tips and other gratuities.
Both men worked as wait staff at Sultan Ahmet Turkish Cuisine between September 2023 and late summer 2024, earning $17.50 per hour plus bonuses and tips. They applied under subsection 116(2) of the Employment Standards Act, 2000 (ESA) to review ESO decisions that had awarded overtime and public holiday pay but declined to order payment of tips.
Fixed ‘$1,500–$1,700’ scheme under scrutiny
The core of the dispute was the restaurant’s practice of promising servers a flat tip payment of about $1,500 to $1,700 per month if they worked 170 hours, pro‑rated for other hours, regardless of how much customers actually tipped.
Mulroney noted evidence that this approach broke the link between tips left by patrons and amounts paid out, writing that “the monthly tip distribution figures demonstrate that the restaurant was distributing revenue and not tips.”
According to the board’s decision, at that time, Sultan Ahmet’s point‑of‑sale (POS) system initially produced daily server‑specific breakdowns of sales and tips, enabling employees to see how much had been tipped on their tables. However, “information on tip revenue was only shown to them for a short period of their tenure,” and the restaurant never provided periodic statements that would let servers reconcile what they received against what customers paid.
The written policy—said by owner Denesh Balar to have been drafted by an external HR consultancy and to codify a pre‑existing practice—also promised management between $1,000 and $5,000 a month from the tip pool, depending on seniority, performance and “revenue impact.”
Onus to prove lawful exception
Because Sultan Ahmet admitted withholding tips and relied on a statutory exception allowing tip pooling, the OLRB placed the legal burden squarely on the employer.
“The party seeking to rely on [an] exemption bears the legal and evidentiary onus of establishing that the exemption applies,” the decision states, adding that exceptions to the ESA must be an “exact fit” and that employers as paymasters must “show that [they] acted in strict adherence to the statute.”
The ESA treats tips and other gratuities as wages for relevant purposes and, in the board’s words, “defaults to the concept that tips or other gratuities belong to the recipient unless distributed under a tip sharing policy that complies with the Act.”
Nearly three-quarters (73%) of workers in the food‑service industry say that they or a co‑worker have had their tips "stolen" before, according to a previous report from CBC.
One‑third of tip pool attributed to managers
For the 13‑month period from September 2023 to September 2024, Sultan Ahmet’s own records showed total tips collected of $399,407, with $130,037—about one‑third—allocated to four managers or executives: Balar, head chef Ahmet Dogan, Balar’s spouse Kristina, and an employee identified only as “Elena,” according to the OLRB.
Yet the board found there was no contemporaneous documentary evidence, such as employment contracts or transfer records, to substantiate any entitlement or payment of those amounts, and no clear proof that employees were told managers shared in the pool.
Even if the entire pool had been distributed, Mulroney held that Balar, as sole shareholder, did not satisfy the test in subsection 14.4(5) of the ESA, which allows directors or shareholders to share in tips only if they “regularly perform to a substantial degree” the same work as tipped employees.
On the evidence of his wide‑ranging managerial and franchising duties, the decision concludes that “he did not perform ‘hands‑on’ restaurant duties either regularly or to a substantial degree,” and therefore “should not have received any money from the tip pool.”
Saskatchewan’s updated employment standards came into force earlier this year, introducing new protections for workers who earn tips, take sick leave or require time off after pregnancy loss or interpersonal violence.
Posting requirement and remedy
The OLRB also found that, from June 21, 2024, onward, the restaurant failed to comply with new ESA subsection 14.4(6), which requires employers to post any policy that allows employers, directors or shareholders to share in redistributed tips “in at least one conspicuous place” in the workplace.
Given what it described as “many anomalies” in the purported tip‑sharing system, the board came up with a three‑part remedy limited to the two applicants: reconciling recorded versus actual payments, enforcing the promised $1,500‑for‑170‑hours formula on an equitable basis, and reallocating to the servers their proportional shares of the $137,037.20 attributed to managers.
The amended Orders to Pay direct Sultan Ahmet Turkish Cuisine to pay the additional amounts to the Director of Employment Standards in trust for the applicants within 30 days, failing which administration fees of 10 per cent will be added.
Under Ontario’s ESA, an employer “generally cannot withhold, make deductions from, or make an employee return their tips or other gratuities,” with some exceptions stated in the Act.
If an employer illegally keeps tips, “the amount wrongfully kept will be considered a debt owing by the employer to the employee and is enforceable under the ESA … as if it were wages owing.”
