Review Comp Time and Overtime Rules in Canada

By Catherine Skrzypinski November 7, 2023

​The shift toward remote and hybrid work in Canada has posed new challenges among employers who need to comply with requirements for comp time and overtime, which vary by province, including Ontario, British Columbia (B.C.) and Alberta.

Defining Comp Time

Employers need to familiarize themselves with how provinces' provisions on comp time—also referred to as banked overtime or time off in lieu—work hand in hand with overtime mandates.

Comp time allows an employee to take paid time off from work instead of being paid for overtime hours. In provinces that allow time off in lieu, along with the federal sector, employees are entitled to 1.5 hours of time off—or time and a half—for each hour of overtime.

While most jurisdictions in Canada allow employers to provide paid time off instead of overtime pay in certain circumstances, lieu time is not specifically addressed by employment legislation in New Brunswick, Nova Scotia or Nunavut, said Anthony Panacci, partner at Fasken in Toronto.

Ontario’s Workforce Earns Time and a Half

Overtime pay is mandatory for most private-sector workers in Canada, subject to various exceptions in provinces and territories. For instance, an employee with managerial and supervisory responsibilities generally does not qualify for overtime.

In Ontario, when a nonunion employee works beyond 44 hours in a week, the time afterward counts as overtime, as set out in Ontario's Employment Standards Act. A nonunion employee who works overtime is typically entitled to be paid for that overtime at 1.5 times their regular rate.

Salaried employees in Ontario are eligible for overtime pay unless exempt, Panacci added.

An employee and an employer in an Ontario nonunion workplace must agree in writing before the employee receives paid time off work instead of overtime pay, he said. An employee must take the paid time off within three months of the pay period in which they worked the overtime, or within 12 months if the employer agreed to that in writing.

Employers in Ontario with employees whose hours may vary from week to week may want to consider averaging agreements, explained Gayle Wadden, chief legal officer and co-founder of Compliance Works Inc. in Toronto. That allows an employee's hours to be averaged over a period of weeks, with overtime being paid only if the averaged hours are over the overtime threshold.

B.C.’s Workers Can Bank Overtime

According to B.C.'s Employment Standards Act, employees are entitled to paid time and a half when they work more than eight hours a day or 40 hours in a week. Many employees, including nonunion members, are eligible for overtime pay in B.C., except managers, professionals and high-tech employees.

Employers in B.C. may permit employees to bank overtime, which may be used to take time off with pay, explained Cissy Pau, principal consultant at Clear HR Consulting in Vancouver.

An employee can make a request in writing to place their overtime wages into a time bank rather than have them be paid during the pay period in which they are earned, she continued. Later on, the employee can ask for part or all of their wages in the time bank to be paid out, or for time off with pay for a period agreed upon by the employer and the employee.

Employers in B.C. should place a limit on the number of hours an employee can bank—perhaps around 80 hours maximum, Pau recommended.

Alberta Employees Earn Straight Time Pay

Alberta's Employer Standards Code defines overtime as the total of an employee's work hours exceeding eight on each workday in the workweek or exceeding 44 hours in the workweek, whichever is greater. In Alberta, employees can take time off in lieu as straight time—meaning one hour of time off for each hour of overtime worked, Wadden said.

An employee may claim time off instead of overtime pay within a certain period, according to Alberta's employment standards laws. The employee's supervisor must approve the time off. Alberta's legislation specifies that the employee must receive a copy of an overtime agreement when an employer gives paid time off with regular pay instead of paying overtime pay.

Employees in Alberta must use up banked overtime within six months of the end of the pay period in which they earned it, unless a longer period is agreed to as a part of a collective agreement, Wadden added.

HR Should Clarify Overtime and Comp Time Policies

Human resources can develop the following practices to account for comp time and overtime, experts said:

  • Set out rules and expectations in an overtime policy. HR could establish procedures regarding written overtime requests, including permission to work overtime and agreements to provide time off in lieu of overtime pay.
  • Have a clear system for tracking employees' hours. Keep accurate records of hours worked and monitor when an employee is working overtime. Accurate and comprehensive records can be the first line of defense against claims for unpaid overtime.
  • Make sure the company's overtime policy complies with legislation. If the company policy requires approval for overtime, employers are still required to pay employees for overtime that they work, even if they do not obtain approval.
  • Ensure managers and supervisors have adequate training about overtime. Make sure they understand the legal obligations and the risks of noncompliance.

HR professionals needs to take a strategic role, Pau said. "They need to know their province's rules, keep an eye out on the company's finances and make sure their employees are not burning out," she stated.

Catherine Skrzypinski is a freelance writer based in Vancouver, B.C.



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