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- Issued: September 2010
- Revised: October 1, 2015
- Content last reviewed: October 2015
- PDF Version [ 832 Kb / 66 pages | Download Adobe Reader ]

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 working 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 (available at Ontario.ca/ESAtools) can help you find out if this applies.**

**Helpful Tip: **If you are reviewing this chapter to understand how special rules apply when the overtime threshold for a particular type of work is higher than 44 hours, or when a lower overtime threshold is in place because of an employment contract, the following material is still relevant. You simply need to replace 44 hours with the particular overtime threshold that applies to your situation.

Averaging hours of work for overtime pay purposes can only be done if an employer has applied for and received approval from the Ministry of Labour’s Director of Employment Standards. The employer also needs to have an employee’s written agreement to average his or her hours of work.

For more information about overtime, visit the “Overtime” section of the Hours of Work & Overtime Tool (available at Ontario.ca/ESAtools). The form for applying for averaging hours can be found at: Ontario.ca/ESAforms.

**Q: Is there a daily overtime pay requirement?**

**A**. Unless the employee’s employment contract or collective agreement provides the employee with a right to overtime pay when the number of hours worked in a day exceeds a certain amount, overtime pay is not 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 managerial/supervisory exemption to overtime pay would not apply and the employee would be entitled to overtime pay 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, entitlement to overtime pay will hinge on whether at least 50 per cent of the working hours were spent in a job category that is covered by overtime pay rules. If they were, the employee is entitled to overtime pay if he or she worked 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. As such, there are no hours to count for that day for overtime pay purposes. |

Employee works on the public holiday and gets Premium Pay plus public holiday pay for the day.^{[1]} |
Hours worked on the public holiday do not count for overtime pay purposes. |

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 for overtime pay purposes. |

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.^{[1]}Premium Pay |

Overtime pay calculations vary depending on the type of payment arrangement between an employer and an employee. For more information about overtime and how it is calculated, see the “Overtime” section of the Hours of Work & Overtime Tool (available at Ontario.ca/ESAtools).

- Hourly
- Hourly rate, plus commissions
- Fixed (unchanging) salary
- Salary for set hours
- Piecework or straight commission
- Mixed hourly rate

In this section, examples are given of overtime pay calculations for each of the above categories of employees. These descriptions and examples are intended to help you quickly determine the type of payment arrangement(s) that are in place and how to calculate overtime pay in each situation.

**IMPORTANT NOTE: In these examples, “regular pay” means 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 regular hourly rate for each hour worked.

View an example**Example A: ** Ravi’s regular pay is $14 per hour. This week Ravi worked 46 hours.

*Calculating his overtime pay: *

- Ravi's hours of overtime are calculated:
- 46 hours – 44 hours per week = 2 overtime hours

- His overtime rate is calculated:
- $14 per hour x 1.5 = $21.00 per hour (overtime rate)

- Then his overtime wages are calculated:
- 2 hours x $21.00 per hour = $42.00

- Finally, Ravi’s regular pay for the week is added to his overtime wages:
- Regular Pay: 44 hours x $14 per hour = $616
- Overtime pay: 2 hours x $21.00 = $42.00
- Total Pay = $658.00 ($616 + $42)

Therefore, Ravi is owed $658.00 for this 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, a regular rate must be established. 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 $15.00 an hour, plus commission. In one work week, she worked 47 hours and was paid $705.00 in hourly wages, plus $100 in commission.

*Calculating her overtime pay:*

- Justine's regular rate is calculated:
- $705.00 + $100 = $805.00 (total wages paid)
- $805.00 ÷ 44 hours = $18.30 per hour (regular rate)

- Then her overtime rate is calculated:
- $18.30 per hour × 1.5 = $27.45 per hour (overtime rate)

- Next her overtime wages are calculated:
- 47 hours – 44 hours = 3 hours of overtime
- 3 hours × $27.45 per hour = $82.35 earned in overtime wages

- Finally, the amount already paid at regular wage for the 3 hours of overtime is subtracted from the overtime calculation (Note: She was already paid $15.00/hour for all the hours she worked, including those 3 overtime hours):
- 3 hours × $15.00 per hour = $45.00 (regular rate for overtime hours)
- $82.35 - $45.00 = $37.35 (outstanding amount still needed to be paid).

Therefore, Justine is entitled to a total pay of $842.35 for that week.

An employee on a 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 (or a lower threshold that has been set out in an employment contract; e.g., 40 hours per week). Additional hours must be paid at an overtime rate.

View an example**Example C: ** Sharon’s fixed salary is $800 per week. This week she worked 48 hours.

*Calculating her overtime pay: *

- Sharon's regular rate is calculated:
- $800 salary ÷ 44 hours = $18.18 per hour
- Note: Sharon’s salary of $800 covers her first 44 hours of work.

- Next, her overtime rate is calculated:
- $18.18 per hour x 1.5 = $27.27 per hour (overtime rate)

- Her overtime wages are calculated:
- 4 hours x $27.27 per hour = $109.08

- Finally, Sharon's regular pay for the week is added to her overtime wages:
- Regular Pay = $800 (salary)
- Overtime Pay = $109.08
- Total Pay = $909.08 ($800 + $109.09)

Therefore, Sharon is entitled to $909.08 in total pay for that week.

An employee receiving a salary for a set number of hours is someone who is paid a set salary for a set number of hours in the work week. However, his or her salary is adjusted if he or she works more or less than the set number of hours. Hours up to 44 are paid at straight time. Additional hours (more than 44 hours) must be paid at an overtime rate.

View an example**Example D:** Ben’s contract states that he is to be paid a “salary” of $700 per week and has a regular work week of 40 hours. However, if Ben works less than or more than 40 hours in the week, the employer reduces or increases Ben’s pay.

The reductions or increases to his weekly salary are calculated based on an hourly rate of $17.50, determined by dividing the “salary” of $700 per week by the number of hours in a regular work week (40 hours). For example, if Ben misses three hours of work in his regular 40 hour work week because of a medical appointment, he is paid $647.50 for that week. In another week, if he has put in an additional two hours to finish a project, he is paid $735.

In the example below, Ben works 50 hours one week.

*Calculating his overtime pay:*

- Ben’s regular rate is calculated:
- $700 salary ÷ 40 hours = $17.50 per hour

- His non-overtime earnings are calculated:
- $17.50 per hour x 44 hours = $770

- His overtime rate is calculated:
- $17.50 per hour x 1.5 overtime = $26.25 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 $26.25 per hour = $157.50

- Finally, Ben's regular pay for the week is added to his overtime wages:
- Regular Pay: $770
- Overtime Pay: $157.50
- Total Pay: $927.50 ($770 + $157.50)

Therefore, Ben is entitled to $927.50 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.

View an example**Example E:** Becka is paid on a piecework basis. Rhian earns straight commissions on sales or offers to purchase goods or services that are normally made at the employer’s place of business. 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.

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

This is when an employee performs two types of work that have two different rates of pay.

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 such an agreement has been made, the employee must be given a minimum of 1½ hours of paid time off work for each hour of overtime 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.
- For more information about Overtime and Time Off in Lieu and how it is calculated see the “Overtime and Time Off in Lieu” section of the Hours of Work & Overtime Tool (available at Ontario.ca/ESAtools).

**IMPORTANT NOTE: If the employment relationship ends before an employee has taken the paid time off, he or she 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. 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.

That the type of work employees perform is:

- covered by regular overtime pay rules, and that overtime pay is applied after 44 hours of work in the week, or at a lower threshold if provided for in an employment contract, OR
- covered by special rules for overtime, and that overtime pay is applied after the legislated threshold of hours worked in the week is reached, OR
- not covered by (exempt from) regular overtime pay rules.

If the work is covered by regular or special overtime pay rules, that:

- work performed beyond the overtime threshold for the work week is paid at a rate of at least 1 ½ times the employee’s regular rate of pay for each hour of overtime worked, OR
- if a written agreement between the employer and employee is in place, that work performed beyond the overtime threshold for the work week is taken as paid lieu time off at a rate of at least 1 ½ hours of paid time off for each hour of overtime worked.

If paid lieu time off is given for overtime hours worked, that:

- the paid time off is taken within three months of the week in which overtime was worked, OR
- if stated in a written agreement between the employee and employer, that the paid time off in lieu of overtime pay is taken within 12 months of being worked, and
- if employment ends before all paid time off in lieu of overtime hours are taken, that the employee receives overtime pay for the remaining lieu time.

An employee no longer working with the employer receives all outstanding overtime pay within seven days of their employment ending or on the date that would have been the employee’s next pay day, whichever is later.

Where an employer wishes to average hours of work for overtime pay purposes, that the employer has:

- obtained written authorization from each affected employee to average hours for overtime pay purposes, and
- applied for and received approval from the Director of Employment Standards.

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