For Employers

Overtime: Are You Paying Enough?

Are you paying your employees all the overtime to which they are entitled?

As an employer, it is important that you are familiar with, and comply with, the overtime requirements set out in the Employment Standards Act.

Failure to comply with the Employment Standards Act can result in a complaint being filed against you, a substantive payout to a disgruntled employee, and perhaps even a fine for contravening the Employment Standards Act.

Overtime entitlements are applicable to the number of hours worked in a day or the number of hours worked in a week:

Daily Overtime

Overtime calculated on a daily basis is not payable on the first eight hours your employee works in a day. Once your employee has worked eight hours in a day, you must pay that employee time-and-a-half for up to the next four hours he or she works. Once your employee has worked 12 hours in a day, you are obligated to pay that employee double time. This applies even if your employee has worked less than 40 hours in a week.

Weekly Overtime

Once an employee has worked more than 40 hours per week, he or she is entitled to overtime pay at time-and-a-half. This is true even if your employee has not worked more than 8 hours on any given day. So if your employee worked seven hours a day for six days during a week, then your employee would have worked 42 hours during the week. Your employee would then be entitled to two hours of overtime, paid at time-and-a-half.

It is important to note that you cannot contract out of the overtime provisions of the Employment Standards Act. Rather than paying straight overtime, there are a number of alternative options that employees and employers can agree upon.

Employees and employers can, for example, agree to enter into an averaging agreement where the employees’ hours per week are averaged out over a period up to four weeks. You should note, however, that the requirements for averaging agreements are quite strict.

Alternatively, at an employee’s request, a time bank be established. With a time bank, overtime hours are credited to the time bank instead of being paid to the employee for the pay period where the overtime takes place. An employee can then use this time bank to take paid time off. When the time bank is closed, then the outstanding balance in the time bank must be paid to the employee.

The overtime provisions in the Employment Standards Act apply to most employees, but some employees, such as managers, may be excluded.

To determine whether the overtime provisions of the Employment Standards Act apply to you and your employees, we welcome you to contact us for a consultation.

This blog is produced by Waterstone Law Group LLP. This blog is intended for information purposes only and is not offered as legal advice for a specific claim. Subscription to or use of this site does not establish a solicitor – client relationship between the user and Waterstone Law Group LLP or any of the individual contributors. For advice relating to your employment law claim, please contact us to arrange for a consultation.

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