Requirements for overtime pay for employees in Ontario is set by The Employment Standards Act and its Regulations (ESA). It also states which types of employees and industries are exempt or entitled to overtime pay. It is important that employers, managers, and supervisors understand the overtime requirements and know what they need to do to comply. Here are a few key areas that you need to know:
What is the law for Ontario’s overtime?
Under the ESA, the general rule is that an employee is entitled to overtime pay should they work over 44 hours a week.
How do you calculate overtime?
The overtime pay rate is one and a half times the employee’s regular hourly rate. Therefore, if an individual earns $21 an hour, their overtime hourly pay rate would be $31.50 ($21 X 1.5).
The overtime pay for an employee who is paid a fixed salary can be calculated using:
- Weekly Salary / 44 Hours a Week = Regular Hourly Rate of Pay
- Regular Hourly Rate of Pay x 1.5 = Overtime Rate
For example, an employee’s salary is $1000 a week. They worked 48 hours this week. Their overtime rate of pay would be:
- $1000 / 44 Hours a Week = $22.73 (Regular Hourly Rate)
- $22.73 x 1.5 = $34.10 (Overtime Rate)
Therefore, their total pay is:
- 48 hours – 44 hours = 4 hours of overtime
- 4 hours of overtime X $34.10 = $136.40
- Total Pay = $1000 + $136.40 = $1136.40
Keep in mind that overtime is not calculated on a daily basis – it is calculated weekly.
Are there any exceptions to overtime pay in Ontario?
Although most employees in Ontario are entitled to overtime pay if they have worked more than 44 hours a week, there are a number of exceptions under the ESA:
- Supervisors and Managers: Most commonly, managers and supervisors do not qualify for overtime if the work they do is managerial or supervisory. Even if they perform other kinds of tasks that are not managerial or supervisory, they are not entitled to get overtime pay if these tasks are performed only on an irregular or exceptional basis. The ESA’s rules on manager/supervisor exemptions can be difficult to navigate. We recommend reaching out to a member of the HRPAR team for clarification on overtime requirements for anyone holding a managerial or supervisory title in your organization.
- Certain industries and professionals:Professionals such as lawyers, public accountants, engineers, architects are exempt from overtime pay.
- Special Rules:Certain industries have special overtime rules – for example, employees who work in the construction of streets, highways or parking lots are entitled to overtime pay for each hour worked over 55 hours in a work week, as opposed to the general 44 hour a week rule.
For these reasons, it is strongly recommended to consult professional advice before developing and finalizing employment agreements and clauses on hours of work and overtime pay – as well as implementing HR policies in Employee Handbooks on overtime.
A list of jobs and sectors with special rules and exceptions to overtime pay can be found on the website of Government of Ontario.
What is an overtime averaging agreement?
- Under an “averaging agreement”, hours of work of an employee can be averaged over a specific period, for a maximum of four weeks, for the purposes of calculating overtime pay. Under such an agreement, an employee would only qualify for overtime pay if the average hours worked per week during the averaging period exceeds 44 hours. Where a union does not represent employees, averaging agreements must contain an expiry date that cannot be more than two years from the date the averaging agreement takes effect.
- An employee can receive paid time off instead of overtime pay if their employer has agreed to it. For every hour worked beyond 44 hours, the employee earns 1.5 hours of paid time off. It is important to ensure that the employee takes time off within 3 months of when the overtime was earned, or within 12 months if agreed to in writing by the employee.
Under the ESA, certain agreements are not allowed, and are deemed invalid. Under no circumstances is an employee able to opt out of their right to overtime pay.
Even though I specifically asked an employee not to work overtime, they still did. Can I pay them their regular wage or do I have to pay them overtime?
It is mandatory under the ESA to pay overtime to all employees who work more than 44 hours a week. An employee’s overtime does not need to be authorized for them to earn overtime pay. However, as an employer, you could take other actions in an attempt to prevent this issue moving forward. These can include speaking to the employee to ensure they understand the Company’s policy about overtime and the clear expectation that prior approval is received before working overtime hours, as well as informing them that progressive discipline steps can be taken for failing to follow the Company’s process for overtime approvals.
Does training time count as overtime?
According to the ESA, if an employee is completing training that is mandated by the law or their employer, then the time spent in training is counted as their work time. An example of this would be new employee orientation training. However, time spent in training that is not required by the law and/or the organization does not count towards overtime.
Meal periods, vacations, paid sick days, and public holidays are not counted as hours worked for the purposes of calculating overtime under the ESA.
Understanding the ESA’s rules on overtime ensures a fair and productive work environment. If you are unsure whether you are in compliance with the ESA or not, contact us today for support! We are here to assist you with overtime pay and payroll processes.
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