Unless he/ she is excluded from the hours of work and overtime provisions of the ESA, or has an averaging agreement, an employee must be paid overtime wages if the employee works more than eight hours in any one day. For time worked over eight (8) hours and up to 12 hours in one day, an employee must be paid overtime pay of 1.5 times his or her regular wage rate. Any time worked beyond 12 hours in one day must be paid at 2 times the employee’s regular wage rate (ESA, s 40(1)). This applies even if the employee does not work more than 40 hours in the week.
Unless part of an averaging agreement, overtime must also be calculated on a weekly basis. For any time over 40 hours per week, an employee will receive 1.5 times his/ her regular wage (s 40(2)). When determining the weekly overtime, employers must use only the first eight hours of each day worked (s 40(3)). Essentially, this means that if an employee works six days out of the week, eight hours each day, eight of those hours must be paid at 1.5 times the regular rate. However, if an employee works 10 hours a day for four days a week, it would be calculated under daily overtime as the weekly hours still add up to 40. Even though the pay period may end mid-week, calculations of overtime pay are based on overtime hours for the week, not the pay period. Under s.1 of the ESA, a “week” for purposes of weekly overtime is a period of seven consecutive days beginning on Sunday at 12:00 am and ending at midnight the following Saturday.
Averaging agreements must meet certain criteria and are governed by section 37 of the ESA. The Employment Standards Branch has stated that if an agreement fails to meet all of the conditions noted in s.37(2) of the ESA, it will find that the averaging agreement is not valid. Under the Employment Standards Regulation, certain parties are excluded from s.37 of the ESA, and are therefore unable to enter into averaging agreements. When an averaging agreement is in place, and an employee has been required or allowed to work more than 12 hours a day during an averaging agreement period, the employee must be paid double his or her regular wage for the time over 12 hours. When an averaging agreement is in place, and an employee has been required or allowed to work more than an average of 40 hours a week during the averaging agreement period, the employee must be paid 1.5 times his or her regular wage for the time over 40 hours. If, during an averaging agreement period, an employee works more hours than were set out in the averaging agreement, section 37(6) specifies how his or her pay is to be calculated for the additional time worked. Section 37(12) of the ESA deems certain provisions to be included in an averaging agreement.
Section 42 of the ESA permits the employer, following a written request by an employee, to establish a time bank for the employee, and credit the employee’s overtime wages to the time bank instead of paying them to the employee. Section 42 contains provisions governing the wage rates at which wages must be credited to a time bank and paying out the funds credited to a time bank. An employee may request to be paid part or all of the wages in the time bank, in which case the employer must pay those wages. An employee may use banked wages to take time off with pay at a time mutually agreed to by the employer and the employee.
Overtime wages earned when working under a s.37 averaging agreement can be banked pursuant to s.42 of the ESA.
Under the Employment Standards Regulation, certain employees are excluded from the hours of work and overtime provisions of the ESA.
For information on hours of work and rest periods, see Hours of Work.
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