Overtime

[Mali Singh]

#98384

Forum: Private

We are in the process of revamping out OT policy, employees are based in ON/MB/QC.
Our standard work day is 7 hours paid, 1 hour unpaid lunch with a 35 hour work week. We will provide OT as time off in lieu.

For those in non management (OT eligible roles) for any hours worked between the hours of 36-provincial OT threshold (using ON as an example and saying 36 hours- anything above 44 hours) we were thinking providing a 1 for 1 rate and then once they cross the OT threshold, a rate of 1.5x. My question is do we need to provide anything for the the time that’s technically beyond the work hours but not as OT as yet? For us most common is travel required for work beyond work hours (for travel within work hours, we just count it as work)

For when time off in lieu is accumulated, can we require staff to use this within a certain time if they agree in writing (say 3 weeks) or do we have to follow provincial banking standards?

[Haley O’Halloran]

#98386

Because your standard work week is 35 hours, but statutory overtime thresholds are higher (e.g., 44 hours in Ontario), employment standards legislation generally does not require any premium compensation for hours worked between 36 hours and the provincial overtime threshold. Those hours are simply considered regular hours under employment standards. As a result, providing time off in lieu at a 1:1 rate for hours between 36 and the overtime threshold is a policy choice rather than a legal requirement. The key requirement is that once an employee exceeds the provincial overtime threshold, the time must be compensated at 1.5× pay or 1.5 hours of paid time off in lieu for each overtime hour.

Regarding travel outside regular working hours, whether it must be counted as work time depends on the circumstances (for example, whether the employee is required to travel for work rather than commuting). If the travel counts as work under employment standards rules, it should be included when calculating weekly hours toward the overtime threshold. However, there is no requirement to provide a premium rate for those hours unless they push the employee past the applicable overtime threshold.

For time off in lieu of overtime, provincial employment standards generally require a written agreement with the employee, and the banked time must be credited at the appropriate rate (typically 1.5 hours for each overtime hour). Legislation also sets timelines for when this time must be used—for example, in Ontario it must generally be taken within three months of the week it was earned, or within up to 12 months if the employee agrees in writing. Because of these statutory limits, employers cannot replace them with their own shorter expiry rules, though they may set reasonable internal processes for scheduling and using lieu time within those legislated periods.

-HRInsider Staff

[Mali Singh]

#98387

For those hours worked between 36-44 though, they would still have to be paid as regular hours right? Or could we have a policy to have those as time off in lieu too with the employee’s permission as they go over a standard work week?

[Haley O’Halloran]

#98389

Yes — those hours still have to be compensated, but they do not necessarily have to be paid in wages if you and the employee agree to bank them as time off in lieu.

Employment standards legislation in Ontario, Manitoba, and Quebec requires employees to be paid for all hours worked, but it does not require that compensation be in cash if there is a lawful time-banking arrangement. The statutory rules around overtime banking (e.g., written agreement and 1.5× credit) apply specifically to hours that qualify as overtime under the legislation. For hours below the overtime threshold (such as 36–44 hours in Ontario when overtime starts at 44), the legislation generally treats them as regular hours, so employers have more flexibility in how they structure compensation, provided the employee ultimately receives equivalent paid time off or wages.

In practice, this means you could implement a policy where hours worked beyond your standard 35-hour work week but below the provincial overtime threshold are banked as time off at a 1:1 rate, provided employees agree to the arrangement. Many employers structure this as “flex time” or “time-in-lieu of extra hours” rather than overtime banking. The important distinction is that once statutory overtime thresholds are reached, the stricter rules apply (including 1.5× credit and written agreement requirements, as well as provincial timelines for using the banked overtime).

From a policy perspective, it is best to clearly separate the two categories:

1. Extra hours (36–OT threshold) → may be banked at 1:1 or paid as regular hours according to policy.

2. Statutory overtime hours → must follow provincial overtime rules, including 1.5× compensation and legislated timelines for taking lieu time.

-HRInsider Staff

[Mali Singh]

#98390

Ok thanks, that’s very helpful! Bit more nuanced but in terms of getting the employees to agree to this, how transparent do the options need to be? As in, if we have always done this (pay time off in lieu for these hours and OT) can we just get this in written confirmation or does the explicit choice of having it paid out vs time off in lieu need to be offered? In the event some staff choose 1 or the other, do both need to be honored?

[Haley O’Halloran]

#98391

For hours below the statutory overtime threshold (e.g., 36–44 hours in Ontario), the legislation generally treats these as regular hours, so there is more flexibility. You can set a policy that these hours are banked as time off in lieu at 1:1 rather than paid out, provided employees agree to the arrangement and are ultimately compensated for the time worked. In this situation, you typically do not have to offer a choice between pay and time off—it can be structured as the employer’s policy—as long as it is clearly communicated and acknowledged by employees.

For statutory overtime hours, the rules are stricter. Provinces such as Ontario allow overtime to be taken as time off in lieu only if there is a written agreement with the employee, and the time must be credited at 1.5 hours for each overtime hour worked and used within the legislated timelines. The legislation generally requires the employee’s written agreement to bank overtime, but it does not necessarily require the employer to offer both options (pay or lieu) each time overtime occurs. An employer can have a policy that overtime is banked as lieu time, provided employees have agreed in writing.

If some employees decline to agree to banking overtime, then overtime generally must be paid out in wages instead. In other words, you can implement a policy that defaults to lieu time, but employees must voluntarily agree to it, and if someone does not agree, you would need to pay overtime instead. From a practical standpoint, many employers implement a written overtime/lieu-time agreement as part of the policy acknowledgment so that the arrangement applies consistently unless an employee opts out.

-HRInsider Staff

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