Tagged: overtime
-
AuthorPosts
-
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?
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
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?
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
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?
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
With respect to overtime averaging, can an employer in Ontario or Quebec use a 4-week averaging period and allow employees to adjust their schedules within that period as hours are accumulated, provided all hours worked are tracked and the final overtime entitlement is calculated at the end of the 4 weeks? For example, if an employee works 4 extra hours on one day and starts 4 hours later the next day, can those hours be netted within the averaging period, with any remaining overtime at the end being paid or provided as time off in lieu where permitted?
For Manitoba, would that approach fail under the default daily overtime threshold unless a valid flex-time or averaging arrangement is already in place?
In Ontario, an employer can use a 4-week overtime averaging period, but only if there is a valid written averaging agreement that complies with the ESA. Under such an agreement, overtime is calculated based on the average weekly hours over the period, not on each individual week. This allows excess hours in one week to be offset by fewer hours in another, with any overtime owing determined at the end of the averaging period and paid or provided as time off in lieu (where agreed).
That said, this is not truly “day-to-day netting.” Ontario does not have a daily overtime threshold, so working extra hours one day and fewer the next is generally irrelevant in itself. What matters legally is the total hours across the averaging period. The flexibility you describe is achievable in effect, but only through proper averaging—employers cannot retroactively adjust schedules or informally net hours to avoid overtime.
In Quebec, the framework is different. Overtime is generally calculated on a weekly basis (over 40 hours), and while employers often have scheduling flexibility that allows hours to fluctuate within or between weeks, there is no equivalent, widely used statutory averaging mechanism like Ontario’s. As a result, similar outcomes may be possible in practice, but they depend more on how schedules are structured and less on a formal averaging regime.
In Manitoba, your proposed approach would not work under default rules because overtime applies after 8 hours in a day or 40 hours in a week. This means extra hours worked on a given day trigger overtime immediately and cannot be offset by working fewer hours later. To achieve averaging or “netting” of hours, the employer must have a valid flex-time or averaging agreement in place; otherwise, daily overtime obligations apply regardless of later schedule adjustments.
-HRInsider Staff
To confirm, if we have it in writing as confirmation, could we place some employees in a particular program based in ON on an averaging schedule (as they accumulated more time due to frequency in travel) and others part of a different program (also in ON) on a non averaging system ?
Yes—under Ontario’s Employment Standards Act, you can have some employees on an overtime averaging arrangement and others on the standard (non-averaged) system, as long as each employee (or group) has a valid, compliant written averaging agreement in place where required. The ESA does not require averaging to be applied uniformly across all employees—it’s permissible to tailor it to specific roles or programs, such as those involving frequent travel.
That said, the distinction should be based on legitimate operational differences (e.g., travel demands, scheduling variability) and applied consistently within each group. You’ll also need to ensure all ESA requirements for averaging agreements are met (including any necessary approvals and limits), and avoid any perception of unfair or discriminatory treatment between groups. Going forward, I highly recommend working with legal counsel or hiring an HR team to be available to you at your workplace so you can go over these questions in depth with them.
-HRInsider Staff
-
AuthorPosts
- You must be logged in to reply to this topic.