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Averaging and Time Off in Lieu

  • Content last reviewed: January 2012

For most employees, overtime begins once the employee has worked more than 44 hours in a work week. This means that they must receive overtime pay for time worked in excess of 44 hours in the work week. The overtime pay rate must be at least 1½ times the employee's regular rate of pay.

If certain conditions are met, hours of work may be averaged over two or more weeks for purposes of calculating entitlement to overtime pay (which means that overtime pay will be payable only if the average number of hours per week in the averaging period exceeds 44). Employers who want to average an employee's hours of work for the purpose of determining overtime pay must:

  • Obtain written agreement for averaging from the employee, or from the union if the employee is represented by a union, and
  • Obtain approval from the Director of Employment Standards. If the Director has not made a decision on an approval application within 30 days, overtime averaging over a period of two weeks may begin, provided certain conditions are met.

Example:

An employer and employee have agreed in writing that the employee's hours of work may be averaged over a period of two weeks for purposes of determining overtime pay entitlements and that the employee may work up to 54 hours in a work week (six hours in excess of the general daily limit). The Director of Employment Standards has issued an approval to permit both averaging of hours of work and excess hours of work.

If the employee works 40 hours in week 1 of the averaging period and 54 hours in week 2, the employee’s overtime hours can be calculated as follows:

  • Average number of hours worked per week = 47 (94÷2)
  • Average number of overtime hours per week = 3 (47-44)
  • Total overtime hours in averaging period = 6 (2x3)

Some people may find it easier to calculate the overtime hours this way:

  • Total hours worked in the averaging period = 94 hours
  • Overtime threshold for averaging period = 88 hours (44×2)
  • Total overtime hours in averaging period = 6 hours (94–88)

Note: Averaging periods cannot overlap one another and must follow one after the other without gaps or breaks.

Agreements for Paid Time Off in Lieu of Overtime Pay

An employee and an employer can agree in writing that the employee will receive paid time off work instead of overtime pay. This is sometimes called "banked" time or "time off in lieu." If an employee has agreed to bank overtime hours, he or she must be given 1½ hours of paid time off work for each hour of overtime worked.

Paid time off must be taken within three months of the week in which the overtime was earned or, if the employee agrees in writing, it can be taken within 12 months.

If an employee's job ends before he or she has taken the paid time off, the employee must be paid for all unused banked time. This 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.

 
 




 

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