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Overtime Pay and Time Off In Lieu

  • Content last reviewed: April 2019

For most employees, overtime begins once an 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. However, some employees work in jobs where the overtime threshold is more than 44 hours in a work week or where the right to overtime pay does not apply. For more information visit the Guide to employment standards special rules and exemptions.

Overtime Pay is 1½ times the employee's regular rate of pay. (This is often called "time and a half"). For example, an employee who has a regular rate of $15.00 an hour will have an overtime rate of $22.50 an hour (15 × 1.5 = 22.50). The employee must therefore be paid at a rate of at least $22.50 an hour for every hour worked in excess of 44 in a work week.

Overtime is Calculated on a Weekly Basis

The Employment Standards Act (ESA) does not give an employee a right to overtime pay for working more hours in a day than are in his or her regular work day (unless that results in the employee working more than 44 hours in the work week). However, some employees have a right to be paid overtime on a daily basis under their contracts of employment or collective agreement.

If the employee has more than one regular rate of pay for work performed and, in a work week, the employee performed work for the employer in excess of the overtime threshold, the employer must calculate overtime using the corresponding rate of pay for each overtime hour worked.

Hours of work may be averaged over two or more work weeks up to a maximum of four weeks for overtime pay purposes if the employee has entered into a valid electronic or written agreement for averaging. An averaging agreement must meet certain requirements.

Agreements for Paid Time Off in Lieu of Overtime Pay

An employee and an employer can agree electronically or 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 electronically or 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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Employment Standards Information Centre
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