Table of Contents | Print This Page

- ISBN (HTML): 978-1-4435-4490-0
- ISBN (PDF): 978-1-4435-4491-7
- ISBN (Print): 978-1-4435-4489-4
- Issued: September 2010
- Revised: November 2011
- Content last reviewed: November 2011
- PDF Version [ 295 Kb / 58 pages | Download Adobe Reader ]
- See also: Hours of Work & Overtime Tool

This workbook has been prepared to assist employers and employees in understanding some of their obligations and rights under the Employment Standards Act (ESA) and its regulations. It does not take the place of the ESA and its regulations and it should not be considered to offer any legal advice on your particular situation.

*For most employees, overtime begins after they have worked 44 hours in a work week regardless of whether they are full-time, part-time, students or casual employees. After 44 hours, they must receive overtime pay for each hour worked, which is a minimum of 1.5 times the employee's regular rate of pay (often called "time and a half”). However, some businesses and/or employees are exempt or have special conditions. The Special Rule Tool can help you find out if this applies.*

**Helpful Tip: **If you have checked the chart and discovered that the type of work your employees do has an overtime threshold that is higher than 44 hours, the following material is still relevant. You simply need to replace 44 hours with the particular overtime threshold that applies to your employee.

Averaging hours of work for overtime pay purposes can only be done if you have applied and received approval from the Director of Employment Standards. You also need to have an employee's written agreement to average his or her hours of work. Additional information on averaging hours of work and step-by-step instructions for applying can be found at: http://www.labour.gov.on.ca/english/es/forms/hours.php.

**Q: Does daily overtime exist?**

**A**. Unless the employee’s employment contract or collective agreement provides the employee with a right to overtime when the number of hours worked in a day exceeds a certain amount, overtime pay is never calculated on a daily basis.

**Q: Can managers and supervisors earn overtime?**

**A**. Managers and supervisors are not covered by overtime rules. However, it is not enough to simply call an employee a ‘manager’ or ’supervisor’. For the employee to be exempt from the overtime provisions found in the Employment Standards Act (ESA), he or she must do work that is supervisory or managerial in nature and only do non-managerial or non-supervisory work on an irregular or exceptional basis.

If a manager of a shoe store performs the duties of the employees he or she manages every day from noon to 1 p.m. to cover the lunch rush, the performance of these non-managerial duties is not irregular. Therefore, the employee would be entitled to overtime if he or she works more than 44 hours in a week.

**Q: What if an employee does more than one kind of work during the week?**

**A.** If an employee does different kinds of work in a week you must check if at least 50 per cent of the working hours were spent in a job category that is covered by overtime rules. If they were, the employee is entitled to overtime pay if he or she works more than 44 hours in that week.

**Q: How is overtime pay calculated when there is a public holiday during the week? **

**A.** This depends on whether the employee works on the public holiday or not, and how he or she is paid. The following table outlines the **three possibilities:**

Scenario | Outcome |
---|---|

Employee has the day off with public holiday pay. |
No hours were worked on the public holiday that can count toward calculating overtime pay. |

Employee works on the public holiday and gets |
Hours worked on the public holiday do not count toward calculating overtime pay. |

Employee works on the public holiday, is paid at straight time and receives a substitute day off (for which he or she will receive public holiday pay). | Hours worked on the public holiday do count toward calculating overtime pay. |

***Premium Pay** is 1.5 times the employee's regular rate. Please see the section on Public Holiday Pay for a full explanation of public holiday rules.

Overtime pay calculations are different depending on the type of payment arrangement you have with your employee.

- Hourly
- Hourly rate plus commissions
- Fixed (unchanging) salary
- Fluctuating or adjustable salary
- Piecework or straight commission

In this section, examples are given of overtime calculations for each. These descriptions and examples are intended to help you quickly determine the type of payment arrangement(s) you have with your employees and how to calculate their overtime pay.

*IMPORTANT NOTE: Regular pay is pay for all non-overtime hours in the work week.*

This is the most straightforward arrangement. An employee who is paid an hourly rate receives that amount for every hour worked up to 44 hours per week. For any hours over that, the employee receives time and a half his or her hourly rate for each hour worked.

View An Example**Example A: ** Ravi’s regular pay is $11 an hour. This week Ravi worked 53 hours.

*Calculating his overtime pay: *

- Ravi's hours of overtime are calculated:
- 53 hours – 44 hours per week = 9 overtime hours

- His overtime rate is calculated:
- $11/hour x 1.5 overtime rate = $16.50 per hour (overtime rate)

- Then his overtime wages are calculated:
- 9 hours x $16.50 per hour = $148.50

- Finally, Ravi’s regular pay for the week is added to his overtime wages:
- Reg. Pay: 44 hours x $11 per hour = $484.00
- Overtime pay: 9 hours x $16.50 = $148.50
- Total Pay = $632.50 ($484.00 + $148.50)

Therefore, Ravi is owed $632.50 for his week of work.

An employee in this category receives an hourly rate for all hours worked. He or she also receives commissions as part of his or her weekly pay.

For this employee, you must establish a regular rate. This is not the same as the hourly rate; it is calculated as his or her total earnings in a week, divided by the number of non-overtime hours he or she worked in that week. This regular rate is then used to calculate the amount of overtime pay that is owed.

View An Example**Example B**: Justine is paid $10.25 an hour, plus commission. In one work week she worked 50 hours and was paid $512.50 in hourly wages, plus $100 in commission.

*Calculating her overtime pay:*

- Justine's regular rate is calculated:
- $512.50 + $100 = $612.50 (total wages paid)
- $612.50/44 hours = $13.92 an hour (regular rate)

- Then her overtime rate is calculated:
- $13.92/hour x 1.5 overtime rate = $20.88/hour (overtime rate)

- Next her overtime wages are calculated:
- 50 hours - 44 hours = 6 hours of overtime
- 6 hours x $20.88/hour = $125.28 earned in overtime wages

- Finally, the amount already paid at regular wage for the 6 hours of overtime is subtracted from the overtime calculation (Note: She was already paid $10.25/hour for all the hours she worked, including those 6 overtime hours):
- 6 hours x $10.25 per hour = $61.50 (regular rate for overtime hours)
- $125.28 - $61.50 = $63.78 (outstanding amount still needed to be paid).

Therefore, Justine is entitled to a total pay of $676.28 for that week.

An employee on fixed salary is someone whose hours of work may change from day to day but whose weekly salary stays the same. The fixed salary is actually the employee's pay for all hours worked up to and including 44 hours per week. Additional hours must be paid at an overtime rate.

View An Example**Example C: ** Sharon’s fixed salary is $500 per week. This week she worked 50 hours.

*Calculating her overtime pay: *

- Sharon's regular rate is calculated:
- $500 salary ÷ 44 hours = $11.36 per hour
- Note: Sharon's salary of $500.00 covers her first 44 hours of work.

- Next, her overtime rate is calculated:
- $11.36 per hour x 1.5 overtime rate = $17.04 per hour (overtime rate)

- Her overtime wages are calculated:
- 6 hours x $17.04 per hour = $102.24

- Finally, Sharon's regular pay for the week is added to her overtime wages:
- Reg. Pay = $500 (salary)
- Overtime Pay = $102.24
- Total Pay = $602.24 ($500.00 + $102.24)

Therefore, Sharon is entitled to $602.24 in total pay for that week.

A fluctuating or adjustable salary employee is someone who is paid a set salary for a set number of hours. However, his or her salary is adjusted if he or she works more or fewer than the set number of hours. Hours up to 44 are paid at straight time. Additional hours (> 44 hours) must be paid at an overtime rate.

View An Example**Example D:** Ben's salary is $440 in a regular work week of 40 hours. His salary is adjusted for weeks in which he works either more hours or fewer hours. This week he worked 50 hours.

*Calculating his overtime pay:*

- Ben’s regular rate is calculated:
- $440 salary ÷ 40 hours = $11 per hour
- Note: The agreement that he is paid $440 for 40 hours of work means his regular rate will always be $11 per hour.

- His non-overtime earnings are calculated:
- $11 per hour x 44 hours = $484

- His overtime rate is calculated:
- $11 per hour x 1.5 overtime = $16.50 per hour (overtime rate)

- His hours of overtime are calculated:
- 50 hours – 44 hours per week = 6 overtime hours

- Overtime wages are then calculated:
- 6 hours x $16.50 per hour = $99

- Finally, Ben's regular pay for the week is added to his overtime wages:
- Regular Pay: $484
- Overtime Pay: $99
- Total Pay: $583 ($440 + $90)

Therefore, Ben is entitled to $583 in total pay for the week.

Piecework or straight commission employees are paid according to what they produce. Their wages are calculated based on the number of pieces they complete or commissions they earn rather than on the number of hours they work.

*IMPORTANT NOTE: Regular pay is pay for all non-overtime hours in the work week.*

View An Example

**Example E:** Becka is paid on a piecework basis. Rhian earns straight commissions. They both worked 48 hours this work week and each received a total of $528.

*Calculating their overtime pay:*

- Their regular rate is calculated:
- $528 ÷ 44 hours = $12 per hour

- Their overtime rate is then calculated:
- $12 per hour x 1.5 overtime = $18 per hour (overtime rate)

- Their hours of overtime are calculated:
- 48 hours – 44 hours = 4 hours overtime

- Overtime wages are then calculated:
- 4 hours x $18 per hour = $72
- Note: They are
**both**entitled to $72 in overtime pay in addition to $528 in regular pay.

- Finally, their regular pay for the week is added to their overtime wages:
- Regular Pay: $528
- Overtime Pay: $72
- Total Pay: $600

Therefore, Becka and Rhian are both entitled to $600 in total pay.

This is when an employee performs two types of work that have two different rates of pay. These employees are usually entitled to overtime for hours over 44.

View An Example**Example F:** Aaron works at two different jobs for his employer. For job A he is paid $12 an hour, while for job B he is paid $15. One week he worked a total of 60 hours (36 hours at job A and 24 hours at job B). He received only “straight time” for all the hours he worked. He was paid a total of $792 ($432 for job A and $360 for job B).

Because Aaron has two different hourly rates (depending on what job he is doing for his employer), determining his “regular rate” for overtime pay purposes requires a “weighted average” calculation. This is an average hourly rate based on the proportionate amount of time spent in job A and the proportionate amount of time spent in job B. This requires several steps:

- Determine the percentage of time Aaron spent in each job:
- Job A: 36 hours out of a total of 60: 36 ÷ 60 = 60%
- Job B: 24 hours out of a total of 60: 24 ÷ 60 = 40%

- Using those percentages, determine how many of Aaron’s non-overtime hours (44) should be considered to have been spent on job A and how many should be considered to have been spent on job B:
- Job A: 60% of 44 hours = 26.4 hours
- Job B: 40% of 44 hours = 17.6 hours

- Multiply those hours by the hourly rate for each job to determine how much of Aaron’s total pay should be considered to have been paid for his non-overtime hours:
- Job A: 26.4 hours x $12 per hour = $316.80
- Job B: 17.6 hours x $15 per hour = $264
- Total pay for non-overtime hours = ($316.80 + $264) = $580.80

- Divide the total pay for non-overtime hours by 44 to obtain Aaron’s regular rate:
- $580.80 ÷ 44 = $13.20 per hour

- Multiply the regular rate by 1.5 to determine the overtime pay rate:
- $13.20 x 1.5 = $19.80 per hour (overtime rate)

- Multiply the overtime hours by the overtime pay rate to determine Aaron's overtime pay entitlement:
- (60-44) x $19.80 = $316.80

- Aaron was paid “straight time” for all hours worked, including the overtime hours. Therefore, he has received $211.20 of his over time entitlement:
- $792 total paid - $580.80 paid for non-overtime hours = $211.20

- To determine the outstanding overtime pay entitlement that is due, deduct the total overtime entitlement from the amount that he was already paid:
- $316.80 - $211.20 = $105.60

Therefore, Aaron must be paid an additional $105.60 to satisfy his overtime pay entitlement.

An employee and an employer can agree in writing that the employee will receive paid time off work instead of overtime pay (referred to as "banked" time or "time off in lieu").

If you and your employee have agreed to this, he or she must be given a minimum of 1½ hours of paid time off work for each hour of overtime they worked. The paid time off must be taken either:

- within three months of the week in which the overtime was earned, or
- within 12 months, if the employee agrees in writing.

*IMPORTANT NOTE: If the employee stops working for you before he or she has taken the paid time off, they must receive overtime pay and it must be paid no later than seven days after the date the employment ended or on what would have been the employee’s next pay day.*

An employee can make an agreement to take time off in lieu of overtime pay, or to average hours off work for overtime purposes. *However*, an employer and an employee **cannot agree that the employee will give up his or her right to overtime pay under the Employment Standards Act (ESA).** Also, **an employer cannot lower an employee's regular rate** to avoid paying time and a half after 44 hours (or other overtime threshold that applies) in a work week.

*IMPORTANT NOTE: If the type of work an employee does is covered by overtime rules, the employee's salary cannot cover more than 44 hours per week. A salary arrangement alone cannot disqualify an employee from overtime pay.*

**Please consider the following:**

- Any employee no longer working with the business must receive any outstanding overtime pay within seven days of their employment ending or on the date that would have been their next pay day.
- You need to check which formula you are using to calculate overtime for your employee(s).(i.e., fixed salary, adjustable salary, hourly, etc.).
- There is a different way to calculate overtime in a week where a public holiday falls.

**Questions? Call the Employment Standards Call Centre at 1-800-531-5551**