Time tracking

Why Tracking Overtime Should Matter

Small business employers should note that there are specific regulations that must be followed when it comes to working overtime in Canada. If you’re a small business owner with a workforce, then you should familiarize yourself with these labour laws to ensure the proper overtime regulations are adhered to.

So what is overtime, and why should you be tracking your employees’ extra hours worked?

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What is Overtime?

Overtime, as dictated by the Government of Canada, refers to any hours worked over the standard hours of work of an employee. Working overtime entitles the employee to an additional sum of money on top of their regular wage. Canada overtime laws state that individuals are entitled to overtime benefits with a pay rate of a minimum of 1.5 times their standard hourly wage.

For example, if Stephanie works a full-time retail job of 40 hours a week, any extra hours worked on top of those, 40 is considered overtime. Suppose Stephanie works 45 hours in one week. She will have worked 40 regular hours at minimum wage and 5 overtime hours, at a 1.5 x minimum wage rate.

However, overtime and its pay rates do not apply to certain professions and jobs. Managers and professionals, such as doctors, lawyers, dentists, architects, and engineers, are not eligible for overtime. Suppose Stephanie was a doctor and worked 50 hours a week. In that case, those 50 hours are considered her regular work hours, which she will be paid her regular hourly wage or salaried rate.

Is overtime a good thing or a bad thing?

Overtime is neither good nor bad; it just depends on whom you ask. A tired and overworked employee might say it’s a bad thing. In contrast, an employee who is searching for extra hours and money is pleased to hear of overtime work. In either instance, the employees who work overtime will need to be appropriately compensated for the extra hours within a given period.

Due to the market and customer demands, the needs of the consumer are always changing and evolving. No matter good or bad, overtime is something that will always happen in businesses. Therefore, you will need to ensure you have a proper overtime tracker app or software to help you sort overtime and regular hours to follow all applicable Employment Standard laws.

Why Do You Need to Track Your Employees’ Overtime?

When an employee works overtime, these extra hours of labour are categorized outside of the regular work hours. Employees working overtime are entitled to higher wages for these labour hours compared to their regular hours. This means you will have to differentiate between the two types of work hours to ensure you are properly compensating your workforce.

Canada overtime laws protect employees and their overtime wages. This means, if you are not keeping track of the extra work hours on top of regular hours, you can get in deep trouble with the government. Each province dictates its overtime rates and minimum wage, so there will be some variances in regulations depending on your business’ location within the country.

For example, an employee working overtime in Ontario will have a different schedule and wage compared to an employee working overtime in the Yukon. The Ontario employee is entitled to overtime pay of 1.5 times their regular pay, only after they have worked 44 hours in a week. This 1.5 rate of payment for the Yukon employee is obtained after working 40 hours in a week.

Maximum hours of work

On top of these variances in work hours and overtime pay, the Government of Canada also places restrictions on how many hours total an employee can work in a week. In most cases, the Canadian government states that the maximum number of hours worked in a week is 48. However, there are certain instances where this restriction does not apply.

Such instances include permit work, emergency work, and circumstances that fall under an averaging plan or a modified work schedule. The trucking, shipping, and railway industries also have different work hours and overtime standards compared to general workers.

As a business owner, it is up to you to guarantee that tracking overtime is done correctly and following all applicable labour laws of Canada. For a complete understanding of the country’s overtime and labour laws by province, check out this guide on Canadian labour laws.

Understanding your province’s overtime laws will help ensure your business is payroll compliant. Payroll compliance refers to the legal framework that businesses must follow in regard to the treatment and payment of its employees. Part of being a good business owner who practices time management is following all labour laws regarding overtime, and staying payroll complaints in regards to timesheets, paid time worked, invoicing, and accurate tracking time for proper employee remuneration.

How to Track Overtime and Hours Worked

Businesses will typically use time tracking and scheduling software to track and record every employee’s shifts and hours worked. Such software can help you as the business owner to accurately and automatically track your employees’ regular hours and overtime hours.

Time tracking software can be utilized in multiple ways, including mobile apps, a punch clock app, online time cards, or a time clock kiosk, allowing employees to clock in and out quickly. With GPS tracking and geofencing capabilities, you can ensure your employees are at their job sites or regular office location.

Tracking overtime, as well as regular hours worked, is easy with software. With features like payroll summary reporting, you can view all employees’ regular and overtime shifts per paid period.

Leave Tracking Overtime to QuickBooks Time

Using employee time tracking software as an overtime tracker can help your small business streamline the payroll process and ensure all Canadian labour laws are followed. Proper tracking of overtime hours and regular hours also means your workforce receives the pay they are entitled to, and you only pay for the hours they have worked. Track time accurately and without hassle using software to create comprehensive timesheets records for proper payroll compliance.

Why not start a free trial today to see just how useful it can be?

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Next: How to Schedule Shift Work for Small Businesses>>

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