Overtime pay is a critical aspect of employment law in Ontario, which ensures that some employees who work beyond their regular hours of employment are fairly compensated for their time. However, not every worker is entitled to overtime and, in some cases, overtime may be calculated differently based on the type of work the employee is doing.

This blog post will explore the rules relating to overtime pay in Ontario’s Employment Standards Act. In doing so, this blog aims to help employees understand their rights and obligations with respect to overtime work and compensation.

What is Overtime Pay?

“Overtime pay” refers to payment that an employee receives for working outside of their normal work hours. In Ontario, employers are generally required to pay qualifying employees overtime pay of at least one and a half times’ their regular rate of pay for each hour of work they work in excess of a 44-hour work week (or another threshold, if specified).

How Does Overtime Pay Work?

If an employee is paid $25.00 per hour by their employer and works more than 44 hours in one week, then their employer will need to pay them $37.50 per hour (or one and a half times their “normal” rate) for any overtime hours worked (hours beyond their standard 44 hour work week).

Keep in mind that overtime pay is normally calculated on a weekly basis. This means that if an employee works more than their normal number of daily hours, that does not necessarily mean they will get overtime pay for that specific day.

Who Gets Overtime Pay?

In Ontario, most employees are covered by the Employment Standards Act and therefore entitled to overtime pay, subject to certain exceptions. For example, jobs in a number of categories have special rules and exemptions relating to overtime pay. To learn more, visit the Ontario government’s Industries and jobs with exemptions or special rules page.

Furthermore, individuals who work in a managerial or supervisory role may not be entitled to overtime pay, even if they perform work that is not managerial or supervisory in nature.

Exceptions and Alternative Arrangements for Overtime Pay

While many Ontario employees are entitled to overtime pay, there are some nuances to be aware of. Below, we’ll outline some of the exceptions to overtime and alternative arrangements that employers and employees can make.

Overtime Pay and Different Kinds of Work

Some Ontario employees may work in a position where they do different types of work, some of which may be specifically exempt from overtime pay. In these cases, the employee is entitled to overtime pay for overtime if at least 50% of the hours the employee worked were in the overtime-eligible category.

For instance, suppose an employee worked 30 hours in their overtime-eligible work and 26 hours in their overtime-ineligible work, for a total of 56 working hours. In that case, the employee would be eligible for 12 hours of overtime pay because over 50% of the work they did that week was overtime-eligible work.

Paid Time Off as Alternative to Overtime Pay

In some cases, an employee and employer may agree that the employee will be compensated for overtime work by receiving one and a half hours’ of paid time off work for each hour of overtime worked as an alternative to overtime pay. Note that an employee is not required to accept this agreement.

Averaging Agreements

An employer and employee can agree to “average” an employee’s hours of work for the purposes of calculating overtime pay. For example, an employee might agree to work extra hours in preceding weeks in order to take a day off, rather than missing a day’s pay. In these cases, the employer and employee must work together to determine whether an averaging agreement is appropriate and define the length of time the averaging agreement will remain in place.

Overtime Pay When Leaving Employment

An employee is entitled to receive overtime pay when leaving an employer, provided that the overtime pay accrued during their term of employment.

For agreements wherein the employee is entitled to paid time off instead of overtime pay and the employee has not used all of their paid time off before ending their employment, the employer must pay the employee overtime pay for the overtime hours that were worked.

Overtime Pay Rights

Remember that an employer and employee cannot contract out of the minimum requirements of the Employment Standards Act. This means that an eligible employee is entitled to overtime pay (or time off in lieu), and an employer cannot make an employee agree to forgo overtime pay or lower an employee’s wages to avoid paying overtime wages.

Tips for Employees for Navigating Overtime Pay Issues

Remember that your entitlement to overtime pay can vary based on your position, the circumstances in which you accrued overtime pay, and other factors. To ensure you’re protecting your rights, consider taking the following steps:

  • Understand your eligibility: Not every employee is eligible for overtime pay. Ensure that you understand whether you are eligible for overtime pay and, if so, whether your position requires you to complete work that is not eligible for overtime pay.
  • Check your employment contract and any associated agreements: Check your employment contract to confirm when overtime can be accrued, along with other agreements such as averaging agreements that may impact your ability to claim overtime pay. Keep in mind that your employment contract cannot contract you out of the minimum standards guaranteed by the Employment Standards Act. If you have questions or concerns about how your employment contract impacts your entitlement to overtime pay, speak with an experienced employment law lawyer for guidance.
  • Communicate with your employer: You may run into issues collecting overtime pay if you complete overtime work without confirming with your employer. Ensure that you are communicating with your employer and that they have approved you to perform overtime work if they do not specifically ask you to do it. If you are hoping to implement an averaging agreement, make sure you discuss this with your employer.
  • Track overtime pay: Ensure you are tracking overtime pay yourself to avoid potential discrepancies between your records and your employer. Remember to factor in whether you are performing different types of work (if applicable).

Contact the Skilled Lawyers at Grosman Gale Fletcher Hopkins LLP for Comprehensive Employment Law Advice

At Grosman Gale Fletcher Hopkins LLP, our trusted team of experienced labour and employment lawyers specialize in providing effective solutions for employees and employers to address a range of employment law matters. If you have questions about your employment agreement or want to learn more about your entitlement to overtime pay, contact us online or call us at 416.364.9599 to speak with one of our employment law team members.