Understanding Overtime Pay in Alberta
Overtime Pay in Alberta
Please note, the information provided herein is directed toward non-lawyers for purposes of providing general information and should not be relied upon nor considered legal advice. It is recommended that you always consult with legal counsel for advice tailored to your specific situation.
Who is Entitled to Overtime Pay?
If you are a provincially regulated employee in Alberta, you may be entitled to overtime pay in accordance with the Employment Standards Code RSA 2000 (the “Code”). The Code sets out the 8/44 rule establishing that overtime must be paid for all hours worked in excess of 8 hours in a day or all hours worked in excess of 44 hours in a week, whichever is greater. It can be a bit confusing so below we provide an example,
Example
An employee works the following schedule, what is their overtime pay?
Monday: 8 hours
Tuesday: 10 hours
Wednesday: 12 hours
Thursday: 8 hours
Friday: 8 hours
Total Hours Worked in Work Week: 48 hours
In the above example, the daily overtime hours are 6 (Monday=0, Tuesday=2, Wednesday=4, Thursday=0, Friday=0). The weekly overtime hours are 4 (48-44). Therefore, in accordance with the 8/44 rule, because the daily overtime calculation provides for more overtime hours than the weekly overtime calculation, the employee is entitled to 6 overtime hours as per the daily overtime calculation.
Overtime pay is calculated at 1.5 times the employee’s regular wage (“time-and-a-half).
Who is Exempt from Overtime Pay?
Not all employees who are Provincially regulated in Alberta are entitled to overtime. Employees who are exempt from overtime pay, as per the Employment Standards Regulation 14/1997, includes but is not limited to, employees who are employed in a,
- supervisory capacity,
- managerial capacity, and in a
- “capacity concerning matters of a confidential nature”.
It is important to note that even if the title of your employment position includes the term “manager” or “supervisor” it does not necessarily mean that you are exempt from overtime. It is your position in substance not simply the title of your position that determines whether you are entitled to overtime.
Other employees who are exempt from overtime include certain, professionals, salespersons, and counsellors.
What is an Averaging Arrangement?
Longer shifts, or variation in the number of hours per week, may be more practical in certain industries and such shifts may be preferred by an employee. However, if we apply the 8/44 rule, described above, the overtime implications may not be financially viable for an employer.
As such, an employer may prefer to use an averaging arrangement which allows the employer to average an employee’s hours of work over a period of 1 week to 52 weeks for the purpose of determining the employee’s entitlement to overtime pay.
Example Without Averaging Arrangement
An employer requires an employee to work the following schedule which alternates each week,
Week A
Monday to Thursday: 12 hours per day
Total hours worked: 48
Overtime hours: 16
Week B
Monday to Friday: 8 hours per day
Total hours worked: 40
Overtime hours: 0
The above schedule alternates each week thereby satisfying the employer’s needs and allowing the employee a long weekend every other week. However, when we apply the 8/44 rule (See Above), the employee is entitled to 16 overtime hours for each “Week A” worked when applying the daily overtime calculation (hours worked that exceed 8 hours in a day).
Example With Averaging Arrangement
An employer has an averaging arrangement in place over a 2-week period where overtime is only paid for hours worked above the weekly average of 44-hours per week thereby excluding daily overtime calculations.
Week A
Monday to Thursday: 12 hours per day
Total hours worked: 48
Week B
Monday to Friday: 8 hours per day
Total hours worked: 40
Average Weekly Hours Worked During the Averaging Period (Week A (48) and Week B (40)): 44
In the above example the employee would not be entitled to any overtime hours under such an averaging arrangement.
Averaging Arrangement Requirements?
The Employment Standards Code RSA 2000 provides requirements that an employer must abide by in order for an averaging arrangement to be valid. Such requirements include,
- It must be in writing
- It must specify the number of weeks over which the hours will be averaged (“Averaging Period”)
- The Averaging Period must not exceed 52 weeks
- The employer must provide 2-weeks written notice before the averaging arrangement applies
- The averaging arrangement must specify the manner in which overtime pay will be calculated/paid and include a schedule setting out daily and weekly hours of work for the Averaging Period
Key Takeaways for Employees and Employers?
For Employees:
As an employee it is important to,
- Maintain records of hours worked per week,
- Understand your contract and the implications of the terms within the contract including but not limited to averaging arrangements, and
- If you are unsure whether you are entitled to overtime, consult with legal counsel.
For Employers:
- Ensure that your employment contract/averaging arrangement is compliant with legislation,
- If you are unsure whether an employee is entitled to overtime, consult with legal counsel, and
- Maintain records of the hours your employees have worked.
Getting Help with a Labour & Employment Law Lawyer
The Edmonton and Calgary labour & employment lawyers at Kahane Law Office help both employers and employees. Never in the same matter though! Issues related to the workplace often have significant impacts on both the employer and the employee. We always recommend knowing your rights before signing any documentation or dealing with employee issues. Lastly, learn more about our employment law team here. Kahane Law Office features offices in Calgary and surrounding areas. For help in the Calgary area please call: (403) 225-8810. If you prefer, feel free to email today to contact us.
This article is intended for informational purposes only. Readers are cautioned that this article does not constitute legal or professional advice and should not be relied on as such. Rather, readers should obtain specific legal advice in relation to the issues they are facing.