Earning Tips and Fired From Your Job? The Law Is On Your Side

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If you have recently been fired or terminated from your job and your boss had no valid reason for doing so, that could fall under a wrongful dismissal, where you probably already know that your employer must pay you damages. This payment is in lieu of your employer giving you reasonable notice in cases of firing without just cause. As a general rule of thumb, the amount is equivalent to the salary or wages you would have received with termination with reasonable notice — anywhere between four weeks at the low end and six weeks at the high end for each year of employment.

Employers Are Liable For Tips and Gratuities

Where this can get complicated is if you were earning tips or gratuities in addition to your salary or wage while working somewhere like a bar or restaurant. If you’re like most people in such a line of work, you probably don’t declare all or most of your tips on your income tax return. The question is, in such a situation, is your employee liable to you not only for your base wages, but also for the tips you would have earned during the notice period? And, if your employer is liable for these tips, who calculates that amount — your employer or you?

The B.C. Supreme Court considered these questions, and the judgment is great news for people who earn part of their income from tips.

Sarah Chapple, a restaurant manager, took her employer, Umberto Management Inc., to court. In January 2007, she was dismissed after having worked for the defendant for more than 13 years.

The Umberto Management Inc. Case

The trial judge ruled that Umberto Management should have given Ms. Chapple 15 months’ notice, and therefore she was entitled to 15 months’ pay. As well, the trial judge went on to award her more than $70,000 for the tips she would have earned during the notice period, despite the fact she did not claim all of her gratuities on her income tax, nor did she or the defendant keep records of her tips.

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The defendant appealed the trial judge’s decision. Firstly, Umberto Management alleged that they did have good reason to terminate her in the first place. Therefore, no notice was required. In the alternative, they argued that not only was 15 months’ notice excessive but the award of over $70,000 for tips was excessive, too.

The B.C. Court of Appeal rejected the defendant’s appeal on all grounds.

What does all this mean? If you have been recently terminated without cause by your employer and you earned tips or gratuities, the law is now firmly on your side.

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