Though most employers like to limit the amount of overtime their employees work, sometimes long hours are inevitable. But what happens after your employees put in those extra hours? How do you calculate overtime? Do all your employees qualify for overtime? And what about banking time? In short, it’s enough to make any employer’s head spin.
To help you cut through the noise, we’ve created a quick guide to overtime pay Alberta. For those also calculating overtime in other provinces, we also explain the rest of Canadian overtime pay here. In this guide, we’ll break down Alberta’s overtime pay rate, the overtime thresholds, how to calculate overtime pay, and more.
Let’s jump in.
Like most provinces, Alberta’s overtime pay rate is 1½ times an employee’s regular pay rate.
Employees in Alberta qualify for overtime pay after working more than eight hours in a day or more than 44 hours in a week (whichever is greater). This is sometimes known as the 8/44 rule.
To understand the 8/44 rule, we can use the example of Maya. Let’s say Maya works a 12 hour day on Monday, but eight hour days Tuesday through Friday. Though Maya has not worked more than 44 hours in a week, she worked more than eight hours on Monday, meaning she meets the daily overtime threshold.
Most employees in Alberta qualify for overtime pay, including salaried employees. However, there are some exceptions and special rules for certain industries. It’s important to clarify the rules for your industry upfront because it may change the way you calculate overtime hours. For example, you may need to take monthly overtime totals into account.
In some workplaces, the work week is fewer than 44 hours (ie. a 40-hour work week). Normally, the 8/44 rules still applies to these workplaces. The only exception is when there is a written agreement is in place that overtime hours are to be counted after working fewer than 8 hours in a work day or 44 in a work week.
In some cases, the 8/44 rule does not apply at all and these employees are not eligible for overtime pay in Alberta.
The following employee are not eligible for overtime pay:
In some industries, employees are not exempt from overtime pay, but different overtime rules apply. For instance, some industries have different daily, weekly, and/or monthly overtime pay thresholds. For instance, employees in the taxi cab industry are only eligible for overtime pay after working more than 10 hours in a day or more than 60 hours in a week. On the other hand, logging and lumbering workers qualify for overtime after working more than 10 hours in a day or more than 191 hours in a month. The full list of exceptions can be found here.
The same formula is used to calculate overtime pay for employees in Alberta, regardless of whether basic or special overtime rules apply. Overtime hours are calculated on both a daily and weekly basis (except for instances where monthly overtime also needs to be taken into consideration). Based on the 8/44 rule, overtime hours are whichever is the greater number of overtime hours of the daily, weekly, or (if applicable) monthly totals.
To clarify, let’s use the example of Ilana, who makes $16.00 per hour working in retail. One week, Ilana works the following hours:
To calculate Ilana’s overtime pay, we need to look at her daily and weekly overtime hours:
Based on the 8/44 rule, Ilana’s daily overtime is greater than her weekly overtime, so this is the figure used to calculate her overtime pay. This works out as follows:
Employers and employees in Alberta can enter into a mutual agreement to bank an employee’s overtime hours. This means that instead of receiving overtime pay, the employee can take paid time off.
In order for overtime agreements to be valid, they must meet the following conditions:
Employers are also required to keep records of overtime agreements detailing the following:
These records must be kept for at least three years and employers must provide employees with a pay statement showing the number of banked overtime hours taken with regular pay, for each pay period.
NOTE: Any overtime banked under an agreement made piror to September 1, 2019, is banked at a rate of 1.5 hours for each overtime hour worked. For agreements made after September 1, 2019, overtime is banked at a rate of one hour for each overtime hour worked.
In Alberta, there are two main types of agreements for banked time off:
1. Individual Overtime Agreements
This type of agreement is between an employer and a single employee. Either the employee or the employer can cancel or change this type of agreement by giving one months’ notice in writing.
A sample individual overtime agreement can be found here.
2. Group Overtime Agreements
This type of agreement is between an employer and a group of employees. In this type of agreement, the employer and a majority (more than 50%) of the employees in the designated group must sign the agreement. This type of overtype agreement can also be part of a collective agreement with full-time or part-time employees.
An employer can cancel a group overtime agreement by providing the employees with one months’ notice in writing. If the group of employees wishes to cancel the agreement, they also need to provide one months’ notice in writing and it must be signed by the majority of the employees in the designated group.
A sample of a group overtime agreement can be found here.
Previously employees in Alberta would agree to work a modified schedule through an averaging agreement. However, this is no longer the case.
On July 18, 2019, two new regulations were introduced under the Employment Standards Code in Alberta. One of these new regulations was the Employment Standards (Flexible Averaging Agreements) Amendment Regulation, AR 71/2019, which removed the options for employers and employees to enter into Flexible Averaging Agreements. This meant that after September 1, 2019, Flexible averaging agreements can no longer be entered into.
Though calculating overtime pay in Alberta is not always straightforward, employers should be careful about making any arrangements that do not meet the minimum standards set out in the Employment Standards Code and Regulation.
Keep in mind that employers in Alberta are prohibited from the following:
By avoiding the above you can keep your business on the right side of the law.
Remember, your team is working hard to keep your business going and overtime pay ensures that employees are fairly compensated for the long hours they put in.
Need more explainers? Check out Knit’s other guides:
.svg)
.svg)
.svg)
.svg)
.svg)
