Published on: March 13, 2026

Our revised practice directive for assessable payroll is cutting through confusion by clarifying exactly what needs to be tracked and reported. In this feature, we focus on the reporting of verifiable tips.

By Tanya Colledge

Employers across B.C. have been looking for clearer guidance on how tips and gratuities should be handled in their payroll reporting. In January, we released the revised Assessment Practice Directive 5-245-2(A) — Assessable Payroll to give restaurants, salons, and other employers a straightforward approach to reporting tips and gratuities. The good news is this update is not about adding new requirements — it simply narrows what needs to be included.

Reporting tips and gratuities as part of assessable payroll has long been a requirement in WorkSafeBC policy under the Workers Compensation Act. When employers report tips consistently, we can calculate premiums across similar businesses fairly, helping to ensure that employers do not pay more or less than they should because of their tipping policies for their staff. The updated practice directive explains this requirement by specifying that only verifiable tips must be reported.

“By focusing on verifiable tips, we’re removing unnecessary tracking and giving employers clear, consistent guidance — regardless of a firm’s size, business type, or the tipping model used,” says Chris Back, director, Assessments.

Cash tips no longer need to be tracked

As of January 1, 2026, employers are required to track and report only verifiable tips. For payroll assessment purposes, this means tips and gratuities must be counted when they can be verified through electronic payment systems, other electronic records, or those already included on a worker’s T4.

As a result, cash tips are no longer reportable as part of payroll, unless they are included on the worker’s T4.

Consequently, audits will be simpler to administer, as employers will:

• Provide reports of tips and gratuities that can be verified through existing electronic payment systems or other electronic payment methods
• No longer need to provide a copy of their tipping policy or have employees interviewed about tip-out practices

Steps to stay compliant under the updated practice directive

To align payroll processes, employers should do the following to ensure they’re compliant with the updated directive:

• Confirm your electronic payment systems can generate clear, verifiable tip reports. These electronic records form the basis of what must be included in assessable payroll, so ensuring your systems can produce accurate reports will make compliance easier.
• Stop tracking or reporting cash tips unless they are included on a worker’s T4.
• Review how electronic tips flow through your business. Take a moment to check that electronically recorded tips are being captured cleanly and consistently, without manual workarounds or gaps in the process.
• Share this update across your organization. Make sure payroll, human resources, and operations teams understand the change so it’s applied consistently.

The updated directive offers something service-based employers have been asking for: clear, consistent rules that make payroll reporting easier. By focusing on only verifiable tips, we have eliminated the need to track most cash tips, resulting in a simpler process and fairer assessments across the service industry.

With a few small adjustments, employers can move forward knowing their reporting is accurate and aligns with WorkSafeBC’s clarified requirements.

For more information

You can review changes to the assessable payroll practice directive on worksafebc.com.

This article originally appeared in the Spring 2026 issue of WorkSafe Magazine.

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