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Payroll

Rules of overtime pay in Canada by province


Key Takeaways

  • Each province and territory has a different set of rules regarding overtime pay.

  • Typically, the overtime pay is 1.5 times the employee’s hourly rate.

  • Usually, salaried and commissioned employees who work more than 40 to 44 hours per week are compensated with overtime pay.


  • When you run a business, there may be times you need your team to work extended hours. This is especially true if you're a seasonal business, you’re short-staffed, or your team is working toward a major deadline. 

    As an employer, it’s essential to understand payroll processes and the various overtime pay regulations to compensate your employees fairly for the additional hours they work. 

    Understanding overtime rules, regulations, and calculations can help businesses comply with laws and create a positive work environment. 

    Here, we’ll examine federal and provincial overtime pay rules, focusing on Ontario, Alberta, and British Columbia.

    The 1.5 (time-and-a-half) rule

    The time-and-a-half rule is a standard for calculating overtime pay in Canada. When a federal employee works beyond their standard hours, they’re paid at a rate of 1.5 times their regular wage. 

    For example, if an employee earns $20 per hour and works 50 hours in a week, their overtime pay would be calculated as follows:

    Regular pay for 40 hours: 40 hours x $20/hour = $800

    Time-and-a-half rate: $20/hour x 1.5 = $30/hour

    Overtime hours: 50 hours - 40 hours = 10 hours

    Overtime pay for 10 hours: 10 hours x $30/hour = $300

    Total pay: $800 + $300 = $1,100

    This rule encourages business owners to manage their staff’s workload efficiently while ensuring employees are fairly compensated for working extra hours.

    Comparison of overtime rules in Canada

    The table below provides a comparative summary of overtime rules in the provinces and territories, and on a federal level:

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    As you can see, each province and territory has its own overtime pay rules. Employers must understand and adhere to these regulations based on where their business operates.

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    Federal overtime pay rules

    Under the Canada Labour Code, federal employees are paid overtime if they work more than 40 hours a week. The standard rate for overtime pay is time-and-a-half — 1.5 times the employee's regular wage. 

    Federal overtime laws apply to employees who work in industries the federal government regulates. This includes telecommunications companies, financial institutions, and interprovincial transportation.

    There are exceptions to this rule. For example, those in managerial roles; superintendents; and legal, medical, or dental professionals may be exempt from these overtime regulations.

    Overtime rules in Ontario

    The Employment Standards Act (ESA) outlines Ontario's overtime regulations. Employers must adhere to these rules to ensure fair compensation for their employees.

    Here are the key points regarding Ontario overtime rules:

    • Overtime threshold: Employees are entitled to overtime pay for hours worked beyond 44 hours in a week.
    • Pay rate: The overtime pay rate is time-and-a-half. Averaging agreements may affect how overtime is paid. 
    • Exemptions: Certain professionals, such as managers and supervisors, may not qualify for overtime pay. 

    Example calculation for overtime pay in Ontario

    If an employee in Ontario works 48 hours a week at a rate of $17 per hour:

    Regular pay for 44 hours: 44 hours x $17/hour = $748

    Time-and-a-half rate: $17/hour x 1.5 = $25.50/hour

    Overtime hours: 48 hours - 44 hours = 4 hours

    Overtime pay for 4 hours: 4 hours x $25.50/hour = $102

    Total pay: $748 + $102 = $850

    Specific overtime pay rules in Ontario

    The following are unique overtime pay rules in this province:

    1. No daily overtime: Employees do not earn overtime pay on a daily basis by working more than a certain number of hours in a day, unless they have a collective agreement or it’s outlined in an employment contract.
    2. Can't decline overtime pay: According to the ESA, an employer and employee cannot agree to decline overtime pay. 
    3. Paid time off: An employee can get paid time off instead of overtime pay. Paid time off should be taken within 3 months, or up to 12 months if agreed upon in writing or electronically.
    4. Averaging agreements: These types of agreements allow employers and employees to manage variable hours by averaging them over 2 to 4 weeks to determine overtime eligibility (if the weekly average exceeds 44 hours). 


    Overtime laws in British Columbia (B.C.)

    The overtime laws in B.C. are governed by the province's Employment Standards Act (ESA). These regulations ensure employees are paid fairly for the extra hours they commit outside the standard work hours.

    The following are the main points for overtime laws in B.C.:

    • Overtime threshold: The province’s standard workday is 8 hours. Employees earn overtime pay for hours worked over 8 hours in a day or 40 hours in a week.
    • Pay rate: Time-and-a-half is the compensation for hours worked between 8 to 12 hours in a day. Subsequently, employees are paid double their standard wage for every additional hour worked beyond the 12 hours.
    • Exemptions: Workers in various professions — such as teachers, firefighters, and fishing/hunting guides — are exempt from overtime pay. However, if they work overtime, they should still be compensated for those hours at their regular pay rate. 

    Example calculation for overtime pay in British Columbia

    If an employee works 45 hours in a week and earns $18 per hour:

    Regular pay for 40 hours: 40 hours x $18/hour = $720

    Time-and-a-half rate: $18/hour x 1.5 = $27/hour

    Overtime hours: 45 hours - 40 hours = 5 hours

    Overtime pay for 5 hours: 5 hours x $27/hour = $135

    Total pay: $720 + $135 = $855

    Example calculation for double-time pay

    If a worker clocks in 14 hours of work in a day and earns $23 per hour:

    Regular pay for 8 hours: 8 hours x $23/hour = $184

    Time-and-a-half rate: $23/hour x 1.5 = $34.50/hour

    Time-and-a-half hours: 12 hours - 8 hours = 4 hours

    Time-and-a-half pay for 4 hours: 4 hours x $34.50/hour = $138

    Double-time rate: 14 hours - 12 hours = 2 hours

    Double-time hours: $23/hour x 2 = $46/hour

    Double-time pay for 2 hours: 2 hours x $46/hour = $92

    Total pay: $184 + $138 + $92 = $414

    Specific overtime pay rules in British Columbia

    The following are unique overtime pay rules in this province:

    1. Daily overtime pay: Employees earn time-and-a-half for hours worked beyond 8 hours in a day. They are also entitled to double-time pay once they have worked more than 12 hours in a day.
    2. Banking overtime: Workers can choose to bank their overtime hours instead of receiving immediate payment. This allows them to take paid time off at a later date. This must be established in a written agreement.
    3. Averaging agreement: Employees and employers can have a written agreement to average the variable hours over 1 to 4 weeks to determine overtime eligibility (if the weekly average exceeds 40 hours). 

    Alberta overtime laws

    In Alberta, overtime regulations are outlined in the Employment Standards Code. These laws are created to protect employees and ensure fair remuneration for overtime work.

    Here’s an overview of Alberta overtime laws:

    • Overtime threshold: Employees are entitled to overtime pay for hours worked beyond 8 hours a day or 44 hours a week.
    • Pay rate: Overtime is paid at time-and-a-half the employee’s regular pay for all overtime hours worked.
    • Exemptions: Certain positions, such as managers or professionals in specific sectors, film production, and salespersons, may be exempt from overtime laws.

    Example calculation for overtime pay in Alberta

    If an employee earns $22 per hour and works 50 hours in a week:

    Regular pay for 44 hours: 44 hours x $22/hour = $968

    Time-and-a-half rate: $22/hour x 1.5 = $33/hour

    Overtime hours: 50 hours - 44 hours = 6 hours

    Overtime pay for 6 hours: 6 hours x $33/hour = $198

    Total pay: $968 + $198 = $1,166

    Specific overtime pay rules in Alberta

    The following are unique overtime pay rules in this province:

    1. Daily overtime pay: Employees are entitled to overtime pay for hours worked beyond 8 hours in a day if they also exceed the 44-hour weekly threshold.
    2. Industry-specific rules: Certain industries — such as construction, trucking, and oil well servicing — and taxi cabs have different overtime rules.
    3. Taking time off: Employees can take time off instead of receiving overtime pay with their banked overtime. The employer and the employee must form a written agreement. Banked overtime must be used within 6 months. 

    Learn more with this complete Alberta payroll guide.

    Salaried employees receiving overtime pay

    Salaried employees may qualify for overtime pay, depending on their job classification and responsibilities. In several provinces, if a salaried employee works beyond the standard hours, they may qualify for overtime pay — as long as they aren’t part of the exempt categories.

    How to calculate overtime for salaried employees

    Follow these steps to calculate overtime pay for salaried employees:

    Step 1: Convert the annual salary to an hourly wage. The formula is the annual salary divided by 52 weeks divided by 40 hours. 

    Step 2: Calculate the regular pay based on the number of standard hours they worked. 

    Step 3: Multiply the hourly rate by the time-and-a-half rate.

    Step 4: Take the total hours and subtract the standard hours to determine the number of overtime hours. 

    Step 5: Multiply the overtime hours by the time-and-a-half rate. 

    Step 6: Add the regular pay and the overtime pay to determine the total pay.

    Example of calculating for a salaried employee

    If a salaried employee earns $55,000 annually and works 50 hours in a week, where 40 hours are the regular hours in a week:

    Hourly wage: $55,000 ÷ 52 weeks ÷ 40 hours = $26.44

    Regular pay for 40 hours: 40 hours x $26.44 = $1,057.60

    Time-and-a-half rate: $26.44 x 1.5 = $39.66

    Overtime hours: 50 hours - 40 hours = 10 hours

    Overtime pay for 10 hours: 10 hours x $39.66 = $396.60

    Total pay: $1,057.60 + $396.60 = $1,454.20


    Hourly wage employees receiving overtime pay

    Typically, it’s more straightforward to calculate overtime pay for hourly wage employees than salaried employees. If they work extra hours, they are entitled to overtime pay as determined by the provincial or territorial laws.

    How to calculate overtime for hourly wage employees

    Here’s how to calculate overtime pay for hourly wage employees:

    Step 1: Calculate the regular pay based on the number of standard hours they worked. 

    Step 2: Multiply the hourly rate by the time-and-a-half rate.

    Step 3: Take the total hours and subtract the standard hours to determine the number of overtime hours. 

    Step 4: Multiply the overtime hours by the time-and-a-half rate. 

    Step 5: Add the regular pay and the overtime pay to determine the total pay.

    Example of calculating for an hourly wage employee

    Let’s say an hourly employee earns $20 per hour and works 46 hours in a week:

    Regular pay for 40 hours: 40 hours x $20 = $800

    Time-and-a-half rate: $20 x 1.5 = $30

    Overtime hours: 46 hours - 40 hours = 6 hours

    Overtime pay for 6 hours: 6 hours x $30/hour = $180

    Total pay: $800 + $180 = $980

    Overtime pay for statutory holidays 

    Based on Canadian law, employees who work on statutory holidays are entitled to special compensation. When a holiday occurs, that lowers the overtime threshold by 8 hours. Keep in mind that the rules governing pay for statutory holidays vary by province. 

    However, if an employee works on a statutory holiday, they must be paid their regular wage and additional pay for the hours worked.

    Here’s the general rule: 

    1. Regular pay: Employees receive their average day's pay for the holiday.
    2. Overtime pay: If they work on a statutory holiday, they’re also paid time-and-a-half for the hours worked. 

    Example of calculating statutory holiday pay 

    If an employee earns $22 per hour and works an 8-hour shift on a statutory holiday:

    Average day’s pay: 8 hours x $22 = $176

    Time-and-a-half rate: $22 x 1.5 = $33/hour

    Overtime pay for statutory holiday: 8 hours x $33/hour = $264

    Total pay for holiday work: $176 + $264 = $440

    Remember that each province and territory has different rules for holiday business closures. Some businesses don't operate during statutory holidays, while others remain open. For example, some retail stores and restaurants operate during the holiday season, while banks and government services may be closed. 

    For more information, learn how to navigate stat pay for your employees. Also, you can explore our guide on Ontario holiday pay rules if your business operates in Ontario.

    Best practices for paying overtime

    For businesses to comply with overtime laws and foster a favourable workplace, employers may consider implementing the following best practices:

    1. Clear communication: Educate employees on overtime policies so everyone understands when they’re eligible and how overtime is calculated.
    2. Accurate records: Use digital time-tracking systems or regularly audit employee time sheets to minimize discrepancies.
    3. Manager training: Team leaders must recognize and manage overtime effectively to remain compliant and prevent disputes.
    4. Formal approval process: Implement an approval process for overtime work to manage overhead costs.
    5. Ongoing reviews: Assess employee schedules and workloads to avoid unnecessary overtime demands and encourage work-life balance.

    By adopting these standards, business owners can improve employee productivity, ensure compliance, and enhance team morale.

    Manage your payroll process effectively

    Understanding overtime laws is vital for small and medium-sized businesses. Being aware of federal regulations and provincial variations allows employers to satisfy worker expectations while ensuring compliance and preventing legal disputes.

    Whether operating in Ontario, British Columbia, or Alberta, businesses must stay organized, accurately calculate overtime pay, and compensate employees for their hard work. By following these best practices, employers can comply with the law and build a positive work environment for their employees. 

    Tracking time is vital when it comes to overtime pay. Consider implementing our time-tracking system to ensure overtime payments are processed accurately using QuickBooks Online Advanced.

    Frequently asked questions

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    Money movement services are provided by Intuit Canada Payments Inc.

    This content is for information purposes only and should not be considered legal, accounting or tax advice, or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by region, province, state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer’s particular situation. Intuit does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit does not warrant that the material contained herein will continue to be accurate nor that it is completely free of errors when published. Readers should verify statements before relying on them.

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    Sandy Yong
    Sandy Yong is a personal finance writer, TEDx and Keynote Speaker, and the award-winning author of The Money Master. She's also an avid real estate investor owning several rental properties. Her work has been featured in a variety of platforms including MoneySense, BiggerPockets, TurboTax, and Money We Have.

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