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Ask 10 people about how to handle overtime pay in Canada and might end up with 10 different answers. That’s because there is generally a lot of confusion about overtime laws and how overtime pay is handled in each province. This confusion is not only bad for employees, but it can also create a major headache for employers running payroll.
To make sure that you know what you’re doing when it comes to overtime pay, we talked to Knit People’s Senior Accounting Associate Guriqbal ‘Guri’ Singh. With his help, we’ve put together a province-by-province breakdown on how to handle overtime pay in Canada.
What is overtime pay?
Before we get into the nitty-gritty of overtime pay rules, it’s important to understand what exactly overtime pay is.
Overtime pay is the dollar amount paid to employees who work more than the standard hours specified in the Code or Regulations—in most cases, this means eight hours in a day or 40 hours in a week.
It's the employer's responsibility to pay overtime when an employee works extended hours. The overtime pay rate is a minimum of one and a half times the regular rate of wages.
While this may sound fairly straightforward, it’s not quite that easy. Labour laws vary from province to province, meaning the overtime rate kicks in at different times. The overtime rate itself also changes in some provinces, making the act of calculating overtime pay all the more complicated.
Overtime Pay by Province
|● Employees receive 1.5 times their regular pay for working beyond eight hours in a day or 44 hours in a week.
● If an employee works a compressed work week or is paid through a commission structure, special rules may determine how overtime is calculated.
● Time off may be taken in lieu of overtime pay if there is a written agreement between the employee and employer. For example, if an employee worked an extra eight hours one week, they may be able to take a full day off the following week.
● Employees are entitled to overtime pay at 1.5 times their regular rate if they work beyond eight hours in a day or more than 40 hours in a week. However, overtime pay jumps to 2 times the regular rate for every hour over 12 that worked in a day.
● Similar to Alberta, employees may take time off in lieu of overtime pay if there is a written agreement in place.
● Employees are entitled to overtime of 1.5 times their regular rate after eight hours a day or 40 hours a week.
● Working overtime is voluntary in Manitoba, so employees never have to work more than eight hours daily or 40 hours weekly unless an agreement is in place or in the case of emergencies.
● Overtime can be taken as time off within three months of earning it.
● Commissioned employees are entitled to overtime based on their average wage rate.
● Overtime is based on current on the current minimum wage multiplied by 1.5. Employees who are already compensated more than the overtime rate don’t qualify for overtime pay.
● Employees who do qualify for overtime will only receive it after working for more than 44 hours in a week.
● Certain occupations have different overtime rules and not all occupations are eligible for overtime pay (ie. camp counselors, some government workers, etc.).
|Newfoundland and Labrador||
● Like New Brunswick, the overtime pay rate is based on the current minimum wage, multiplied by 1.5.
● Employees are entitled to overtime after working more than 40 hours a week. However, overtime does not apply if you switch shifts with a co-worker and it results in you working more than 40 hours a week.
● Employees are allowed to bank overtime and take it as paid time off if they have an agreement with their employer.
● Overtime varies based on occupation. Most employees are entitled to 1.5 times their hourly wage if they work more than 48 hours in a week.
● In certain industries, such as gas, oil, and fisheries, employees receive overtime pay based on 1.5 times the minimum wage after working more than 48 hours a week.
● For other professions, such as sawmill workers and landscapers, employees are entitled to overtime pay after working more than 110 hours over a two-week period.
● Employees receive 1.5 times their regular pay for working more than 44 hours in a week. There is no overtime on a daily basis in Ontario, so an employee does not earn overtime pay on a daily basis by working more than a set number of hours in a day.
● Like B.C., averaging agreements may alter the overtime structure.*
● Like Manitoba, the overtime rate is calculated based on an employee’s average wage rate if they work on commission or perform piecework.
*Note that the recent passing of Bill 66 allows employers to enter into averaging agreements with employees to average hours of work for periods of up to four weeks in order to determine entitlement to overtime pay. Employers do not need to obtain approval from the Director of Employment Standards to enter into overtime averaging agreements or into agreements that allow employees to work weekly hours in excess of 48 hours.
|Prince Edward Island||
● Employees receive 1.5 times their hourly wage after working more than 48 hours in a week.
● Overtime rules vary for some occupations (ie. ambulance drivers and community care centre workers are not entitled to overtime pay until working more than 60 hours a week).
● Employees receive 1.5 times their regular pay for working more than 40 hours in a week.
● Employees can request that the overtime owed can be taken in equivalent paid time off.
● When calculating overtime owed, statutory holidays and vacation are counted as days worked
● Overtime may not apply if the employer has been granted approval from the Commission des norms du travail to stagger working hours over multiple weeks.
● In some cases, employees can refuse to work overtime if they have already worked more than 50 hours in a week.
● Employees receive 1.5 times their regular pay for working beyond eight hours in a day or more than 40 hours in a week.
● Some professions are not eligible for overtime pay, such as loggers, fishers, and trappers.
● If an employer is issued an averaging of hours permit by the Director of Labour Standards, overtime guidelines may change, or simply not apply.
● If an employee’s employment is regulated by the Canada Labour Code, they are entitled to 1.5 times their regular wage for all hours worked in excess of eight in a day or 40 in a week.
● Overtime pay can be calculated on a daily or weekly basis. However, if there is a difference in the totals, the employee must be paid the higher amount.
● In some cases, overtime regulations may be affected by Special regulations, averaging agreements or modified work schedules (ie. working a compressed work week).
Are all employees eligible for overtime pay?
Beyond provincial variations in overtime regulations, it’s also important to note that the hours of work and overtime provisions do not apply to all employees.
Managers, superintendents, and any employees who carry out management functions are exempt from overtime. Similarly, architects, dentists, engineers, lawyers, and medical doctors are also excluded from overtime regulations.
There are also a number of industries with different standards for hours of work and overtime pay for certain employees. These industries include trucking, railways, broadcasting, East Coast and Great Lakes shipping, and West Coast shipping.
As you probably gathered by now, overtime pay varies greatly between each province. As a result, you need to pay close attention to the labour laws in your province to make sure that you can adequately budget for overtime pay and properly compensate your employees for any extra hours worked. Better yet, keep track of all overtime pay with Knit's automated payroll software.
Disclaimer: This article provides general information and should not be construed as tax advice. Since tax rules may change over time and can vary by location and industry, please consult a CPA or tax advisor for advice specific to your business.
By Katherine Pendrill on Apr. 29, 2019