A Scarborough-based Tim Hortons has banned employees from accepting tips and will strip them of paid breaks in response to a $2.40 wage hike, the Star has learned.

The revelation comes as the parent company of Canada’s favourite coffee chain accuses “rogue groups” of failing to reflect “the values of our brand.”

Employees at the franchise located at Lawrence Ave. E. and Markham Rd. have been told that as of 2018, there would be “no more tips” and that any tips “must go in to the till.” The instructions posted on a bulletin board also say breaks will no longer be compensated “in light of the new minimum wage increase,” according to documents seen by the Star.

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What the law says about workers’ rights

Employers can decide if tipping is allowed in their businesses. If tipping is not accepted, the employer should make it clear to customers that gratuities will not be accepted by employees or the employer, according to the Ministry of Labour website.

If tips are permitted, it is illegal to withhold them from workers, following changes to the Employment Standards Act introduced by the Ontario government in 2015. Employers can only withhold tips if they are collected and re-distributed later in a tip pool.

Jennifer McCall, who is named on the franchise’s incorporation documents and is listed on employee schedules posted below the new instructions issued to workers, said she was unable to comment.

In a statement, advocacy group for Tim Hortons franchises, the Great White North Franchisee Association, has said franchise owners are left with few options in the face of the minimum wage hike, and a parent company that refuses to increase prices.

“As far as what’s going on in individual stores, I don’t have access to all that information,” Patti Jameson told the Star Friday.

In a statement posted to its website Friday, Tim Hortons — which was purchased by Restaurant Brands International for $12.5 billion (Canadian) in 2014 — said franchise owners had “found this sudden transition challenging.”

“We are committed to helping them work through these changes. However, Tim Hortons® Team Members should never be used to further an agenda or be treated as just an ‘expense.’ This is completely unacceptable,” the statement added.

“These recent actions by a few Restaurant Owners, and the unauthorized statements made to the media by a “rogue group” claiming to speak on behalf of Tim Hortons®, do not reflect the values of our brand.”

Photos of the instructions posted at the Scarborough franchise were provided to the Star by an employee who asked that their name be withheld for fear of reprisal. The employee said they were “shocked” at the new policies.

“These guys are busting their ass,” the worker said of their colleagues.

On Thursday, Ontario Premier Kathleen Wynne accused the owners of two Tim Hortons franchises in Cobourg, Ont., who are also the children of the chain’s founders of bullying employees after they eliminated paid breaks and instituted requirements for employees to pay a portion of their dental and health benefits following the province-wide wage bump, which lifts the hourly minimum from $11.60 to $14.

None of the changes violated workplace laws, but Wynne said the measures were “not decent.”

“It is the act of a bully,” she said.

“I was disappointed to hear about the actions of some Tim Hortons franchise owners here in Ontario,” Labour Minister Kevin Flynn said in a statement.

“While the vast majority of business owners, including Tim Hortons, treat their workers well, some do not,” he added.

“These franchise owners are trying to make a statement, but instead of coming to the government to make that statement, they’re taking it out on their employees. That is simply wrong.”

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The Sunset Grill, a breakfast restaurant franchise, also informed its employees via a memorandum in November that menu increases, an increased “tip out” rate, and a 2018 freeze on kitchen staff wages were “necessary steps” for the company to take in the wake of the minimum wage increase. The same letter called the restaurant industry “especially vulnerable to employee layoffs and potential bankruptcy.”

“Tip outs” refer to a common restaurant practice whereby servers pay a portion of their tips, usually calculated based on their total sales, into a pool that is then distributed among support staff. It’s illegal in Ontario for companies to absorb a portion of the tip pool, but managers may be included in the distribution of tips if they regularly assist with duties other staff members perform.

The Sunset Grill described the 5 per cent tip out policy change as “mandatory” in its memorandum, meaning servers would be required to put 5 per cent of their sales toward the tip pool regardless of the total amount they were given in tips.

Attempts to contact the Sunset Grill head office were unsuccessful. A manager at a downtown Toronto Sunset Grill confirmed the memorandum’s accuracy to the Star and said the restaurant is complying with the new provincial rules.

“We’re following all the employment standards, we’re increasing the minimum wage to $14, following the vacation rules,” he said.

In 2016, the Canadian Franchise Association said its members had “significant concerns” to policy options laid out by two special advisers appointed by the provincial government to review Ontario’s labour and employment laws.

“Of particular concern are sectoral bargaining and card-based certification of unions,” its submission to the Ministry of Labour said, referring to measures that make it easier for workers to unionize.

“The most precarious work and the greatest threat to employees of not being paid or receiving their full benefits occurs when a business fails and goes bankrupt. In the previous five years, 97 per cent of franchises opened in Canada are still operating today compared to 51 per cent of independent businesses opened over the same time period,” the submission added.

According to the Great White North Franchisee Association, the cost of implementing minimum wage hikes to each Tim Hortons franchisee is $6,968 per employee. The Association said the average franchise has around 35 employees, resulting in “$243,889 a year off a franchisee’s bottom line.”

Total sales for Tim Hortons franchises in 2016 were $6.4 billion, according to its latest year-end report.

“Our economy is doing very well thanks to a robust business climate, tremendous leadership from our business community and, of course, the dedication of their employees,” said Flynn. “It’s time all workers get a chance to share in the rewards of this economic success.”

With files from Alex McKeen

Sara Mojtehedzadeh can be reached at smojtehedzadeh@thestar.ca or 416-869-4195.

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