2016-12-15 00:00:00PayrollEnglishRead about the three-hour rule and learn whether you need to pay employees extra if their shift ends early.https://quickbooks.intuit.com/ca/resources/ca_qrc/uploads/2017/03/Small-Business-Owner-Calculates-Employee-Payment-Using-Three-Hour-Rule.jpgUnderstanding Canada’s Three-Hour Rule for Employee Payment

Understanding Canada’s Three-Hour Rule for Employee Payment

2 min read

When business is slow, it’s common practice to cut an employee and let them go home early. However, if your employee has been clocked in for less than three hours, you may have to pay them more than their usual rate. Here’s a look at the exact rules, so you know what’s expected and can ensure your business stays compliant with labour regulations.

Ineligible Employees

This rule only applies to employees who normally work shifts that are longer than three hours. Employees who regularly work three-hour or shorter shifts are not covered by this rule. Note that the rules may vary slightly from province to province, so it’s important to check with your provincial government for exact rules. For example, the Ministry of Labour in Ontario doesn’t extend this rule to students regardless of their age. Conversely, the government in Manitoba does not mention this exemption on its site.

Calculating Pay

If the three hour rule applies to your employee, you may need to pay them more if they get sent home early, but this is not always the case. To find out what to do, you should figure out the pay for three hours of minimum wage labour and your employee’s regular rate for the time worked. Then, you need to pay your employee the greater of these two amounts.

As of 2016, the general minimum wage is $11.40 per hour. When you multiply this amount by three, the result is $34.20. If your employee works a super short shift and earns less than this amount, you should bump their pay up to $34.20. However, if your employee’s earnings exceed this amount, you should pay them as usual.

To illustrate, imagine you have an employee who earns $15 per hour. After working for 1.5 hours, you decide to send her home early. Her regular earnings for the time worked are $22.50. In this case, you should pay her the alternative amount of $34.20.

In contrast, imagine your employee earns $20 per hour and works two hours before being sent home. In this case, your employee’s wages for two hours is $40. This is more than the minimum wage for three hours, so you should pay your employee $40.

The three-hour rule also applies if you call your employee and cancel their shift before it starts. In these cases, as your employee does not log any hours, you should always pay minimum wage multiplied by three hours.

Exceptions to the Three-Hour Rule

The key exception to the three-hour rule is if your employee has to leave for reasons outside of your control. For example, if your employee feels ill and needs to go home early, you do not have to follow the three-hour rule.

It’s critical to note that you cannot avoid this requirement by asking for volunteers to leave early. To explain, imagine you own a restaurant and only few customers have come in to eat. You don’t need all of your servers, so you ask who wants to be cut. Even though your worker has volunteered to go home, you still have to take the three-hour rule into account.

References & Resources

Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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