Bill 201 & How Alberta Restaurants Need To Prepare

Bill 201 (Employment Standards Protecting Workers’ Pay Amendment Act, 2025) is bringing major changes to how restaurants in Alberta must pay and manage their teams. The bill introduces a multi-year minimum wage increase, automatic inflation-based wage adjustments, and strict new rules around tips.

This simplified guide breaks everything down into plain language so Alberta restaurant operators can understand what’s changing and how to prepare.

Summary

Bill 201 raises Alberta’s minimum wage to $16 in 2025, $17 in 2026, and $18 in 2027.
Starting in 2028, minimum wage will increase every year based on inflation.
Tips now legally belong 100% to employees, with no deductions or employer involvement allowed.
Tip pooling is allowed only if employees voluntarily agree in writing and outline how the pool works.
Age-based minimum wages are eliminated, meaning all workers must earn the general minimum wage.
Restaurants must update payroll, tip policies, record keeping, and staff training to stay compliant by December 15, 2025.

Minimum Wage Will Increase Every Year

Bill 201 sets exact minimum wage increases for the next three years:

$16.00/hour: Dec 15, 2025 to Sept 30, 2026
$17.00/hour: Oct 1, 2026 to Sept 30, 2027
$18.00/hour: Oct 1, 2027 to Sept 30, 2028

What this means for restaurant operators:

Update your payroll budgets NOW for these increases.
The first increase happens during the busy December season, so prepare for a higher payroll that month.
Anyone currently earning minimum wage must move up to the new rates on the exact dates.
Even non-minimum-wage staff may expect raises as wage pressure increases.

Minimum Wage Yearly Increase After 2028

Starting October 1, 2028, the minimum wage will rise every year based on Alberta’s Consumer Price Index (CPI).

Key rules:

Wages will be rounded to the nearest $0.05 for simplicity.
Wages will never decrease, even if inflation drops.
The government will publish the new wage by April 1 each year.

What this means for restaurant operators:

Expect annual October wage increases every year.
Build yearly labour cost increases into your financial planning.
Stay alert for the official wage announcement each spring so you can prepare payroll changes.

New Strict Rules for Tips and Gratuities

Bill 201 introduces strong protections for employee tips. These apply to all restaurants, regardless of size.

What counts as a tip?

Cash tips
Credit card/terminal tips
Automatic service charges if customers reasonably believe they go to staff

Who owns the tips?

Employees do. Always. The law states clearly: tips are the property of the employee who earned them.

Employers cannot:

Deduct any amount from tips
Keep any portion of tips
Treat tips as wages
Require employees to hand over tips

If an employer keeps tip money, it becomes a recoverable debt, just like unpaid wages.

Tip Pooling Is Allowed If Employees Agree

Tip pools must follow strict rules:

Tip pooling rules:

The pool must be voluntary and in writing.
The written agreement must explain:
- Who is in the pool
- How much each person contributes
- How tips are divided
- When tips are distributed
Employers can help distribute pooled tips only if employees authorize it in writing.
Employers/managers can join the pool only if:
- All employees agree, and
- The employer actually does tip-earning work (e.g., serving tables)

What this means for restaurant operators:

If you use a tip pool, you MUST formalize it in a written agreement.
Managers should not be in the tip pool unless they regularly perform tip-earning duties.
Keep clear records of all tip pool distributions.

How Alberta Restaurants Should Prepare

Update Your Payroll Budget
- Plan for the $1 hourly increase each year until 2028.
- Expect annual increases tied to inflation after that.
- Adjust menu pricing if necessary to maintain margins.
Update Internal Policies
- Clearly state that tips belong to employees.
- Remove any old policies that allow deductions from tips.
- Write new tip-pool agreements if needed.
Improve Record Keeping
- Track all tips collected and paid out.
- Keep signed tip pool agreements on file.
- Ensure POS and payroll systems show accurate tip transfers.
Train Your Team
- Train managers on the new minimum wage schedule.
- Train supervisors on prohibited deductions.
- Communicate openly with staff so they understand the upcoming changes.
Watch the Deadlines
- Dec 15, 2025 – first wage increase and tip rules take effect
- Oct 1, 2028 – inflation-based wage increases begin

Conclusion

Bill 201 represents a major shift for Alberta’s hospitality industry. Wages are increasing steadily, tips are now fully protected by law, and age-based pay differences are eliminated. With early planning and clear communication, restaurant owners can stay compliant, maintain staff trust, and adjust their business model smoothly.

By preparing now, updating payroll, tightening tip procedures, and training managers, restaurants can avoid penalties and build a fair, transparent workplace that attracts and retains staff.

FAQ

When does the first minimum wage increase under Bill 201 take effect?

The first increase to $16/hour takes effect on December 15, 2025, with additional increases in 2026 and 2027.

Will Alberta’s minimum wage keep increasing after it reaches $18/hour?

Yes, starting October 1, 2028, the minimum wage will automatically increase every year based on Alberta’s inflation rate (CPI).

Can restaurants deduct credit card fees or breakage costs from employee tips?

No, Bill 201 prohibits any deductions, meaning 100% of tips must be paid to employees without employer adjustments.

Are restaurants still allowed to use tip pooling?

Yes, but only if employees voluntarily agree in writing, and the agreement clearly explains how tips are collected and distributed.

Can restaurants pay younger workers a lower minimum wage?

No, Bill 201 eliminates age-based wage categories, so all employees, regardless of age, must earn at least the general minimum wage.

Bill 201 & How Alberta Restaurants Need To Prepare

Summary

Minimum Wage Will Increase Every Year

Minimum Wage Yearly Increase After 2028

New Strict Rules for Tips and Gratuities

Tip Pooling Is Allowed If Employees Agree

How Alberta Restaurants Should Prepare

Conclusion

FAQ

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