Canadian labour laws are set up to protect workers from being overworked and underpaid, and those laws extend to overtime. If your employees work over a certain threshold, you are required to pay them extra money, and it is critical to understand these laws so you are in compliance with them.
Generally, after an employee works 40 hours in a week or eight hours in a day, he or she becomes eligible for overtime. For example, if someone works 10 hours in a day, he or she earns overtime pay for two of those hours. Similarly, if someone works 45 hours in a week, he or she earns overtime pay for five hours.
There are notable exceptions to this rule. For example, in Ontario, the overtime threshold is 44 hours, and workers in the province don’t accumulate overtime on a daily basis. Thus, a worker who works 10 hours in a day receives no overtime pay, and if he works 45 hours in a week, he receives an hour of overtime pay.
To calculate overtime, multiple your employee’s hourly rate by 1.5. For example, if an employee earns $12 per hour, his or her overtime rate is $18. To calculate the overtime rate for a salaried employee, divide the employee’s weekly salary by the usual number of hours worked. Then, multiply the result by 1.5. For example, if an employee usually works 40 hours per week and earns an $800 salary, his estimated hourly rate is $20, making his overtime rate $30.
Salaried workers are eligible to receive overtime pay in Canada. The only workers who don’t receive overtime pay are those in exempt professions. This includes doctors, lawyers, architects, and a few other types of professionals, but it also includes managers and supervisors.
Under Canadian law, your employees receive several paid holidays per year. When a holiday occurs, that lowers the overtime threshold by eight hours.
To explain, imagine it is Christmas week. Your employees receive both Christmas and Boxing Day as paid holidays. If overtime normally kicks in at 40 hours, it is lowered to 24 for this week. Ergo, an employee who works 30 hours receives 16 hours of holiday pay, 24 hours of regular pay, and six hours of overtime pay.
Even with overtime pay, employees are only allowed to work up to 48 hours per week. If you need employees to work more than this number of hours, you may apply for a special permit through the Ministry of Labour. You should apply as early as possible, because you are required to post your permit for at least 30 days before you start scheduling employees for extra hours. If you have an emergency situation that requires more hands on deck, you can pass the 48-hour limit, but you must write up a report and submit it to your regional director or the head of the union representing your employees. You are required to do this within 15 days of the end of the month when the emergency occurred.