Photo Credit - Linda Xu

Photo Credit – Linda Xu

Just in time for the holidays, here is a quick primer on overtime entitlements in Ontario.

The Ontario Employment Standards Act (“ESA”) sets out a maximum number of hours an employee can work before they are entitled to overtime pay. The general rule is that employees must be paid 1½ times their regular rate (i.e. “time and a half”) for each hour over and above 44 hours per week. If your employees are salaried, as opposed to hourly, overtime is calculated by dividing their weekly salary by 44 to arrive at their hourly rate of pay.

If your workplace is unionized, the collective agreement may vary these thresholds, but cannot go below the minimums standards in the ESA overall.

The overtime threshold varies from province to province in Canada, and will depend on whether the provincial or federal rules apply (most employees in Canada are provincially regulated).  The range is 40 to 48 hours, calculated by the week in some provinces, or by an 8-hour day threshold in other provinces.

In Ontario, overtime is calculated on a weekly basis for most workplaces.  Some workplaces, however, may have a written averaging agreement in place, or the employer may have sought Ministry approval under section 22.1 of the ESA, which allows for some variation to the default rule.

Time in lieu of overtime is permitted if the employee and the employer have agreed and the time off is taken within three to twelve months of it being earned. Time in lieu is calculated the same way as overtime, one and one-half hours of paid time off work for each hour of overtime worked.

Not all categories of employees are entitled to overtime (or time in lieu).  For example, management employees and IT professionals (as defined in the ESA) are exempt from overtime and several other provisions of the ESA.  The Ministry of Labour has a user friendly tool for determining which employment rules apply to which jobs.

The Ministry guide on overtime is a helpful tool for general overtime information, including how overtime intersects with public holiday pay.  For more complex application of the overtime rules for your employees, feel free to reach out to us with your questions.