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HIRING IN CANADA

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OVERTIME PAY

Are all employees eligible for overtime pay?

Most employees are eligible for overtime pay, whether they are full-time, part-time, students or casual workers.

But certain job classifications are exempt from the overtime rules set out in the ESA, and some job classifications have different overtime thresholds. Please refer to the chart in the “How Are You Covered by the ESA?” Fact Sheet for details about job-specific exemptions to the overtime pay rules, and jobs that have a special overtime threshold.

Also, employees not covered by the ESA are not governed by the rules on overtime pay. For more information, see What work is not covered by the ESA? in the Fact Sheet.

Do managers and supervisors qualify for overtime pay?

Managers and supervisors don’t qualify for overtime pay if the work they do is managerial or supervisory and they perform non-supervisory or non-managerial tasks on an irregular or exceptional basis.

What is overtime pay?

Overtime pay is at least 1½ times the employee’s regular rate of pay (time and a half).

For example, if an employee’s regular pay is $8 an hour then his or her overtime rate is $12 an hour ($8 x 1½) for every hour worked after 44 in each week.

When does an employee start earning overtime pay?

For most employees, overtime begins after they have worked 44 hours in a work week. After that time, they must receive overtime pay. Some employees, however, may have jobs where the ESA overtime threshold is more than 44 hours in a work week. For further details refer to the chart in the “How Are You Covered by the ESA?” Fact Sheet.

Is overtime calculated daily?

No. Unless a contract of employment or a collective agreement states otherwise, an employee doesn’t earn overtime pay on a daily basis by working more than a set number of hours a day. Overtime is calculated only:

  • on a weekly basis, or
  • over a longer period under an averaging agreement.

What happens if an employee performs both work that qualifies and work that does not qualify for overtime?

The employee qualifies for overtime if at least half of the hours he or she worked in a work week were in a job that is covered by overtime provisions in the ESA.

A typical case:

Gerard works for a taxi company as both a cab driver and a dispatcher in the office. A cab driver’s work is not eligible for overtime pay, but a dispatcher’s work is eligible for overtime pay.

During his work week, Gerard worked 26 hours as a dispatcher and 24 hours driving a cab, for a total of 50 hours. This is six hours over the overtime threshold of 44 hours. Because Gerard spent at least 50 per cent of his working hours that week as a dispatcher, all his hours worked are considered in determining whether he qualifies for overtime pay. Therefore, he qualifies for six hours of overtime pay.

What is an averaging agreement?

An employer and an employee can agree in writing to average the employee’s hours of work over a period of not more than four weeks to determine whether the employee will receive overtime pay. With the approval of the Ministry of Labour’s Director of Employment Standards, an employee and employer can agree to average the employee’s hours of work over a period of more than four weeks. Averaging periods cannot overlap one another and must follow one after the other without gaps or breaks.

This means an employee will qualify for overtime pay if his or her average hours (i.e., the average hours per week during the averaging period) exceed 44 hours.

So, if the agreed period for averaging an employee’s hours of work is four weeks, the employee is entitled to overtime only after working 176 hours during the four work weeks (44 hours x 4 weeks = 176 hours).

Do averaging agreements that were approved by the Director of Employment Standards under the previous act still apply?

Averaging agreements approved by the Director of Employment Standards under the former ESA ceased to be valid on September 4, 2002 (one year after the new ESA came into effect) unless employees are represented by a union and a collective agreement applied to them when the new ESA came into effect (in which case the averaging agreement ceases to be valid once a new collective agreement comes into operation or, if no new collective agreement came into operation, one year after the previous collective agreement expired).

Can an employee agree to have paid time off instead of overtime pay?

Yes, if the employee and employer agree in writing. This is sometimes called “banked” time or “time off in lieu.”

If an employee has agreed to bank overtime hours, he or she must be given 1½ hours of paid time off work for each hour of overtime worked.

Paid time off must be taken within three months of the week in which it was earned or, if the employee agrees in writing, within 12 months.

If an employee’s job ends before he or she has taken the paid time off, the employee must receive overtime pay, no later than seven days after the date the employment ended, or on what would have been the employee’s next pay day, whichever is later.

How is overtime pay calculated?

The calculation of overtime pay depends on the particular circumstances, including: how an employee is paid, whether there is a public holiday that week and whether there is an averaging agreement in place.

For more details about how overtime pay is calculated in different cases, see the examples in the next questions.

How is overtime calculated for employees who are paid hourly?

This depends on the particular circumstances. Below is a common situation involving an employee who is paid hourly, demonstrating how his overtime pay would be calculated.

Calculating the overtime:

When an employee works overtime in a normal work week with no public holiday

Ravi’s regular pay is $8.00 an hour. His overtime rate (time and a half) is $12.00 an hour. This week Ravi worked 53 hours. He’s in a job where any hours worked after 44 are overtime. So Ravi worked nine hours of overtime (53 - 44 = 9).

Ravi’s pay for the week is calculated as follows:

Regular pay: 44 x $8.00 = $352.00

Overtime pay: 9 x $12.00 = 108.00

Total pay: $460.00

What if an employee earns a salary, rather than an hourly wage?

Employees on a fixed salary

Generally, if an employee’s hours of work change from day to day, but his or her weekly pay stays the same, the employee is paid a fixed salary.

For example, suppose an employee works 44 hours one week and 42 hours the next, but receives the same pay each week. That employee is on a fixed salary.

A fixed salary compensates an employee for all non-overtime hours up to and including 44 hours a week. After 44 hours, the employee is entitled to overtime pay.

Calculating the Overtime for Employees on a Fixed Salary

Sharon’s salary is $500.00 a week. She worked 50 hours this work week.

  1. First Sharon’s regular (non-overtime) hourly rate of pay is calculated:
    $500.00 ÷ 44 = $11.36
    Sharon was paid a regular rate of $11.36 for each hour she worked up to and including 44 hours.
  2. Next her overtime rate is calculated:
    $11.36 regular rate X 1½ = $17.04
    Her overtime rate is $17.04 for every hour in excess of 44.
  3. Then the amount of overtime she worked is calculated:
    50 hours - 44 hours = 6 hours of overtime
  4. Her overtime pay is calculated:
    6 hours X $17.04 an hour = $102.24
    Sharon is entitled to $102.24 in overtime pay.
  5. Finally, Sharon’s regular salary and overtime pay are added together:
    Regular salary: $500.00
    Overtime pay: 102.24
    Total pay: $602.24

Result: Sharon is entitled to total pay of $602.24.

Employees on a Fluctuating Salary

If an employee has set hours and a salary that is adjusted for variations in the set hours, the employee’s salary fluctuates.

Calculating the Overtime for Employees on a Fluctuating Salary

For example, Ben is hired on the understanding that he will be paid $400.00 a week for a regular work week of 40 hours. His salary is adjusted for weeks in which he works either more hours or fewer hours. In this case, Ben is actually receiving a wage based on the number of hours he works.

When the salary fluctuates

Ben’s salary is $400.00 in a regular work week of 40 hours (where the salary isn’t adjusted). This week, he worked 50 hours.

  1. First Ben’s regular (non-overtime) hourly rate of pay is calculated:
    $400.00 ) 40 = $10
    Ben’s regular rate of pay is $10.00 an hour.
  2. Next his regular (non-overtime) earnings are calculated. He is entitled to $10.00 an hour for all hours up to and including 44 hours a week:
    $10.00 regular rate X 44 hours = $440.00
    Ben’s regular earnings for the week are $440.00.
  3. Then his hourly overtime rate is calculated:
    $10.00 regular rate X 1½ = $15.00
    His overtime rate is $15.00 for every hour in excess of 44 hours.
  4. The amount of overtime Ben worked is calculated:
    50 hours - 44 hours = 6 hours of overtime.
  5. His overtime pay is calculated:
    6 hours X $15.00 an hour = $90.00
    Ben is entitled to $90.00 in overtime pay.
  6. Finally, Ben’s regular pay and overtime pay are added together:
    Regular pay: $440.00
    Overtime pay: 90.00
    Total pay: $530.00

Result: Ben is entitled to total pay of $530.00.

How is overtime calculated for employees paid by piece work rate or commission?

Some employees earn wages that aren’t based on the number of hours they work in a week, but instead are paid by the number of pieces they complete, and/or by commissions. These employees must be paid at least the equivalent of the minimum wage for each hour worked. They are usually also entitled to receive overtime pay after 44 hours in a work week.

Certain salespersons on commission (other than route salespersons) —who receive all or part of their wages as commissions, and who normally make sales away from their employer’s place of business—are exempt from (i.e., not covered by) the ESA’s overtime provisions.

Calculating the overtime for piecework or straight commission employees

Becka is paid on a piecework basis. Rhian earns straight commissions. They both worked 48 hours this work week and each received a total of $480.00.

  1. First the regular (non-overtime) hourly rate of pay is calculated:
    $480.00 - 44 hours = $10.91
    Their regular hourly rate of pay is $10.91.
  2. Then the hourly overtime rate is calculated:
    $10.91 regular rate X 1½ = $16.37
    Their overtime rate is $16.37 for every hour in excess of 44 hours.
  3. Next, the amount of overtime worked is calculated:
    48 hours - 44 hours = 4 hours of overtime.
  4. The overtime pay is calculated:
    4 hours X $16.37 an hour = $65.48
    They are each entitled to $65.48 in overtime pay.
  5. Finally, the regular pay and overtime pay are added together:
    Regular pay: $480.00
    Overtime pay: 65.48
    Total pay: $545.48

Result: Becka and Rhian are each entitled to total pay of $545.48.

Can an employee agree not to be paid overtime?

No. An employer and an employee can’t agree that the employee will give up his or her right to overtime pay under the ESA.

Is an employer allowed to cut an employee’s regular wage to avoid paying overtime?

An employer can’t reduce an employee’s regular wage to avoid paying time and a half after 44 hours in a work week. For example, if Josée’s regular pay is $12 an hour, her employer can’t drop her regular rate to $8 an hour and then pay her 1½ times $8 an hour for overtime hours worked.

What if the employer does not follow the ESA?

If an employee thinks the employer is not complying with the ESA , he or she can call or visit the nearest Ministry of Labour office to discuss a particular situation or to file a complaint. Complaints are investigated by an employment standards officer who can, if necessary, make orders against an employer - including an order to comply with the ESA. The ministry has a number of options to enforce the ESA, including requesting voluntary compliance, issuing an order to pay wages, an order to comply, an order to compensate, an order to reinstate and/or a notice of contravention, or issuing a ticket or otherwise prosecuting the employer under the Provincial Offences Act.

Employment Standards Information Centre
416-326-7160 or 1-800-531-5551

Ministry of Labour
http://www.gov.on.ca/LAB/english/index.html

 


SOS Newsletter

Employment Standards Act

- Agricultural Workers

- Domestic Workers

- Home Workers

- Hours of Work

- How to file a Claim

- Minimum Wages

- Overtime Pay

- Parental Leave

- Pregnancy Leave

- Public Holidays

- Temporary Layoff

- Termination of Employment

- Seasonal Work

- Severance Pay

- Vacation Pay & Vacation with Pay

- Working in Retail

General Legislations

 

An Introduction to Hiring in Canada

Hiring in Canada or Employment in Canada gives a vast description of Employment Legislation in Canada. It covers Employment Standards Act and other General Employment Legislations regarding jobs in Canada or employment in Canada. Important issues like minimum wages, temporary layoff, termination of employment, severance pay and vacation pay are covered under this section.

Hiring in Canada or Employment in Canada provides sources for Employment Opportunities in Canada available for general applicants as well as jobs in Canada for students.

Hiring in Canada or Employment in Canada also gives reference to the Employment Agencies helping applicants in finding jobs in Canada, both government and private. The viewers can search for Employment Opportunities in Canada through these agencies.

Self-created Jobs is an other feature of Hiring in Canada or Employment in Canada. It is a good source of finding Jobs in Canada.

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