Overtime Entitlements in Ontario

As working practices evolve, the classic 9-5 workday is no longer as common as it once was. With employees increasingly working alternative schedules, it is important to understand if and when overtime entitlements may kick in.


Basic Entitlements:

Overtime Pay:

In Ontario, the Employment Standards Act (the "ESA") establishes the minimum standards for hours of work and overtime pay.

For most employees, overtime begins once the employee has worked more than 44 hours in a work week. Employees who work more than 44 hours per week are entitled to overtime pay at a rate of 1 their regular rate of pay.

If an employee is paid by the hour, their regular rate of pay is the amount they earn per hour. For example, an employee who normally earns $17 per hour would be entitled to receive the following:

  • $17 per hour, for the first 44 hours per week; and
  • $25.50 per hour, for each hour in excess of 44 hours per week.

For all other employees, their regular rate of pay is the amount earned in a regular work week divided by the number of non-overtime hours worked in that week. For example, an employee who earns $750 in a 44-hour work week would have a regular rate of pay of $17.05. The employee's overtime rate of pay would thus be $25.58. The employee would therefore be entitled to receive the following:

  • $750 total for the first 44 hours per week; and
  • $25.58 per hour, for each hour in excess of 44 hours per week.

Time Off in Lieu:

Alternatively, an employer and employee can agree for the employee to receive time off in lieu of overtime pay. In such a case, the employee is entitled to receive 1 paid hours off work for each hour of overtime worked.

The paid time off must be provided within three months of the overtime being earned, although with the employee's agreement that period can be extended to 12 months.

Overtime Averaging:

Generally, overtime is calculated on a weekly basis. However, an employer and employee can agree in writing that the employee's hours of work may be averaged over a period of up to four weeks for the purposes of calculating overtime pay entitlements.

For example, an overtime averaging agreement may allow an employee's overtime to be averaged over a period of four weeks. If the employee worked the following hours:

  • Week 1 46 hours
  • Week 2 40 hours
  • Week 3 50 hours
  • Week 4 36 hours

the employee's average number of hours worked per week would be 43 hours. The employee would therefore have no entitlement to overtime pay, despite having worked more than 44 hours per week for two of the weeks.


Exceptions:

There are numerous exceptions and exclusions to the general overtime rules.

However, it may surprise employees to learn that there is no automatic overtime exemption for employees working in an office setting. Likewise, the manner in which the employee is remunerated, for example, receiving an annual salary, does not automatically mean the employee is exempt from overtime pay. Rather, each employee's entitlement to overtime must be assessed based on a number of factors, including the industry, the role the employee occupies, and the nature of the duties performed by the employee, amongst others.

In Ontario, the following employees may be exempt from overtime:

  • Designated professionals this includes doctors, lawyers, accountants, and engineers, amongst others.
  • IT professionals this includes employees who exercise professional judgement and apply specialized IT knowledge. It does not include administrative and support staff.
  • Managers and supervisors the employee must primarily perform managerial and/or supervisory duties. This is assessed based on the nature of the duties the employee performs on a day to day basis.

Additionally, there are special overtime rules for certain industries in Ontario, such as healthcare, manufacturing and construction, hospitality, transportation, agriculture, and landscaping.

The above lists are not exhaustive. In all cases, employers and employees are encouraged to consult with an employer lawyer to determine whether their occupation is covered by special overtime rules.


Conclusion:

Overtime compensation in Ontario can be complicated. While the starting point is that all employees are entitled to overtime pay for hours worked in excess of 44 hours per week, the reality is that there are many exemptions from that general rule. Given the complexity of the overtime rules, employers and employees alike are encouraged to seek legal assistance when determining overtime entitlements. Lee Workplace law would be happy to help answer any question or concerns you may have about overtime.