Imagine this: Your boss calls you up and asks you to perform overtime as the company is ongoing massive growth. You, as an employee, isn’t sure of what the returns from the overtime will come. So, you’re in an ordeal as to accept the offer or decline it.
Being aware of the overtime in Canada will facilitate your decision making on whether or not to take on this offer.
So, what should you do? It’s difficult, though! Generally, most employees in Alberta are entitled to receive overtime pay, which is at least 1.5 times the employee’s hourly wage rate. What you actually might get depends heavily on the sector you work in and the condition of your company.
Here are the basic rules of overtime in Canada for you to get a better idea:
The Basics of Overtime Pay in Canada
8/44 Rule & Pay Rate
Most employees in Canada are entitled to receive overtime payments. The payments are generally at least 1.5 times the regular hourly wage that the employee receives. The payments can be much higher, though. In some instances, the overtime may be lower than 1.5 times or equal to regular wage if a mutual document is signed previously between the employer and employee.
What counts as overtime?
There’s the 8/44 rule that states any extra hours worked over 8 hours a day or 44 hours a week (whichever is greater) is considered to be overtime. So, if you work 9 hours for 3 days and regular 8 hours for the rest 2 days, you’re not entitled to receive overtime payment. This might seem confusing at first. But, once you understand how it works, it’ll seem easier.
There’s another thing to consider – there are some exemptions where employees won’t be receiving overtime payment in Canada. This depends on particular industries and professions that the person works in.
In most cases, an employer has to pay at least 1.5 times the employee’s regular hourly wage for all the overtime hours worked. This can differ if the employer has signed an agreement beforehand.
Or, an employer can choose to give the employee time off work instead of paying for the overtime. In such a situation, the vacation would be at the same 1.5 times rate for each overtime hour worked or as was mentioned in the overtime agreement.
This time off work, or vacation, can be used by the employee to get off work and live their personal life for a while. This banked overtime hours must be used within 6 months after the day they’re granted. This can change if there’s a mutual agreement on the overtime banking period.
Eligibility To Receive Overtime In Canada
Generally, most employees are entitled to receive overtime payments. The Alberta Employment Standards Code states that employees from certain industries and certain professions are not entitled to receive overtime pay as a part of their job.
People working in the following sectors are not eligible to receive overtime payment in Canada:
- Waged, family farm and ranch employees
- Managers, supervisors and those who’re employed in the confidential capacity
- Salespersons of automobiles, trucks, buses, farm machinery, road construction equipment, heavy-duty equipment, manufactured homes or residential homes
- Licensed salespersons of real estate and securities
- Salespersons over 16 years old and are engaged in direct selling for licensed direct sellers
- Licensed insurance salespeople who are paid entirely by commission income
- Licensed land agents
- Salespersons who solicit orders, principally outside of the employer’s place of business, who are wholly or partly paid by commission (this does not apply to route salespersons)
- Professionals, including agrologists, architects, certified or chartered accountants, chiropractors, dentists, denturists, engineers, geoscientists, information systems professionals, lawyers, students-at-law, optometrists, podiatrists, psychologists, and veterinarians
- Extras in a film or video production
- Counselors or instructors at an educational or recreational camp that is operated on a charitable or not-for-profit basis for children, persons with disabilities, or religious purposes
- Domestic employees (these employees are not exempt from sections 18 and 19 of the Code concerning rest periods and days of rest)
What To Expect
As we’ve previously mentioned, employers are supposed to pay the employees 1.5 times more than the regular hourly wage for the overtime hours. Overtime in Canada is counted by following the 8/44 rule, where the employee receives overtime payment if working hours exceed 8 hours a day or 44 hours a week, whichever is greater.
Similarly, employers might not want to pay the employee extra for the overtime. Instead, they might choose to grant time off work for the employee to repay for the overtime. The time off work must be 1.5 times the hours worked as overtime following the 8/44 hour rule. However, the amount of time off work granted may depend if the employee signed an overtime agreement with the employer.
Commissions & other Incentives
According to the Commission Pay Plans and Minimum Compensation Entitlement, employees who receive incentive-based payments receive minimum wage rates as overtime payments. This includes all the people who’re primarily incentivized by commissions, piecework, or similar methods.
For people who get a combination of both salary and incentives, the hourly rate is used for calculating overtime entitlements. This is given that the salary is equal to or higher than the minimum wage. If the hourly rate is below the minimum wage, the minimum wage is used to calculate the overtime payments in Canada.
In some cases, the employers might ask the employees for a mutual overtime agreement at a specified hourly rate. Such terms can be established on a wide array of use cases. Most commonly, employers reduce the hourly overtime rate if they expect more and consistent overtime hours for the employees. On the other hand, some employers prefer to pay the same hourly rate and compensate for the rest with a regulated banked overtime.
How The Law Applies
The detailed law for Overtime in Canada is given in the Employment Standards Code. If you look into the Division 4, you can see the detailed guidelines for overtime. It also includes the precise laws that apply for individual provinces, particularly in Alberta. The Regulation also gives out special rules to facilitate calculating overtime for several other occupations.
As an employee, it’s very important for you to know what overtime is and how it applies to Canada. Particularly, you must know what kind of payment you’re entitled to and how you’ll be receiving the overtime compensation.
In most cases, your employer must pay at least 1.5 times your average regular hourly wage for each additional overtime hour. The overtime hours are calculated by the 8/44 hour rule. This states that the employee will receive overtime if the work lasts more than 8 hours a day or 44 hours a week, whichever is greater.
On the contrary, employers can also payback for the overtime hours by banked overtime. This grants them time off work as a payment for the overtime. Similar to the previous one, banked overtime is at least 1.5 times the overtime hours worked.
Although most employees are entitled to receive overtime compensations, there are some exceptions. This depends on the profession or industries the employee works in.
If you’re someone who worked overtime but didn’t receive fair compensation, you can surely file a lawsuit against your employer. Talk to expert employment and labor lawyers in Alberta and know what you should do next.
You can, too, book an appointment with us and discuss your case further!