Yes, this structure—and especially the wording “estimated eight Saturdays” paired with a lump sum—can create overtime compliance risk, depending on how it’s handled.

In most Canadian jurisdictions, including Ontario, overtime is calculated based on actual hours worked in each workweek and is typically triggered after 44 hours per week. Those overtime hours must be paid at 1.5 times the employee’s regular rate. A key issue is that employers generally cannot contract out of these minimum standards. Even if an employee agrees to a lump sum arrangement, it can still be non-compliant if, in any given week, the employee works overtime and is not compensated accordingly.

The phrase “estimated eight Saturdays” introduces ambiguity that can increase risk. It suggests that the compensation is tied to a set amount of time rather than a clearly defined project outcome. This can make the lump sum look more like wages for hours worked rather than a true fixed project fee or bonus. If the lump sum is lower than what the employee would earn under proper overtime calculations for those Saturdays, it may be seen as failing to meet minimum employment standards.

There is also a risk if the project takes longer than expected. The word “estimated” leaves open the possibility that the employee may work more than eight Saturdays without additional compensation. This could lead to wage claims or disputes, particularly if the employee later argues that they were not properly paid for overtime hours.

While lump sum payments are not inherently non-compliant, they must be structured carefully. They should either be clearly in addition to regular wages, including overtime, or be designed in a way that ensures overtime obligations are still met. A common compliant approach is to pay regular wages and overtime based on actual hours worked each week, and then provide a lump sum as a completion bonus. This maintains compliance while still offering an incentive.

If you prefer to keep a lump sum structure, it is important to track all hours worked and ensure that the employee receives at least the overtime pay they are entitled to under employment standards legislation. If there is any shortfall, it should be topped up. It is also helpful to clearly define expectations, such as the anticipated hours per Saturday and what happens if the work extends beyond the estimated timeframe.

Overall, the concern is not just the wording itself, but the underlying structure. If the lump sum results in the employee receiving less than what they would be entitled to under overtime rules, there is a real compliance risk. Tightening the language and ensuring that overtime obligations are met in practice will significantly reduce that risk.

I hope this helps!
-HRInsider Staff