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5.14.0 Bonuses, gratuities, and tips A bonus is defined as something, such as money, which is given in addition to what is expected or strictly due, or given in addition to an employee's usual compensation; Footnote1 an inducement to employees to procure efficient and faithful service Footnote2 . A gratuity is defined as something given voluntarily or beyond obligation usually in return for or in anticipation of some service Footnote3 . While there is a voluntary element in the dictionary definitions, in modern business usage the terms have broadened to include amounts which could be included in the terms of a collective agreement. In addition, bonuses and gratuities have become in many cases, an incentive to ensure the employee provides good service, for example, production bonuses; or does something, for example, signing bonuses. Thus, the idea that a bonus or gratuity is an unsolicited and unexpected gift, from employer to employee, has been lessened. Both the terms bonus and gratuity are often used interchangeably in practice. There is usually no question that bonuses and gratuities are earnings, when they are paid by employers, since these amounts are clearly income arising out of employment. Footnote4 This is true even if the person who pays the bonus is standing in the place of the employer, such as a receiver in bankruptcy proceedings. However, gratuities which are gifts from an employer to an employee because of their personal relationship or friendship, rather than the employer-employee one, are not arising out of employment. It is the personal relationship that is prompting the payment and not the employment relationship. Footnote5 The giving of a wedding gift to one employee when it is not the employer's practice to do so, for example, may be more closely linked to friendship between the employer and the employee than to the employment relationship. Gratuities may be given by persons other than employers, such as customers. The gratuity is considered to be arising out of employment if a connection is established between the employment and the work performed, and the reason for the gratuitous payment. This is the case when a customer tips a waiter or waitress. Footnote6 However, if the giving
of the gratuity is not related to the work performed or the services provided, such as due to a personal relationship or friendship, the gratuity cannot be said to be arising out of employment. It is the relationship itself that prompted the payment and not the services performed by the claimant. Allocation of bonuses and gratuities is governed by whether the payment is more closely linked to the services performed or to a particular event or transaction. In other words, what was the reason for the payment? Bonuses and gratuities which have a specific link to measurable production goals and the services required to meet those goals, are allocated to the period in which those services were performed. Footnote7 Bonuses and gratuities most closely linked to a holiday or non-working day are allocated to the week in which the holiday occurred. Footnote8 Bonuses and gratuities paid or payable by reason of a lay-off or separation should be allocated from the date of the event, either the lay-off or the separation, which gave right to the payment. Footnote9 Lastly, bonuses or gratuities to which none of the other subsections apply are allocated to the period in which the services are performed or to the week of the event or transaction. Footnote10

5.5.3 Retroactive increases in wages or salary An increase in wages or salary means that the wage or salary amount is augmented, enlarged, or expanded. This implies that an amount was added to the wages or salary, therefore, constituting a newly agreed rate of pay for the work performed. Often an increase of salary is given retroactively. This occurs during contract renewal where workers continue to perform their duties at their former rate of pay while the contract is being negotiated. When the contract is finally signed and there is a new agreement as to an increased salary level, that new salary is often effective at an earlier date. In this case, payment must be made retroactively to compensate for the difference under the old contract and the increased salary level under the new contract. In other cases, an employer may unilaterally give an increase in salary that may also be retroactive. These retroactive increases in wages or salary are specifically excluded from consideration as earnings Footnote23 .
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