Recent changes to the Employment Standards Act allow employers to pay less overtime pay to employees. If you have been asked to agree to average your hours over 2 to 4 weeks for overtime purposes, then read on.
Let’s assume that you earn $20 an hour and work 30 hours in your first week, 50 hours in your second week, and 50 hours in your third week.
If you have not agreed to allow your employer to average your hours of work over 2 to 4 weeks for overtime purposes, then you would be entitled to overtime pay for your second and third weeks. Overtime at time and a half is paid after 44 hours in a week so you would be paid $30 an hour for 6 of the hours worked in week 2, and $30 an hour for 6 hours worked in week 3.
However, if you agree that the employer can average your hours over the three-week period, you would not be entitled to any overtime pay. This is because the overtime pay will only be payable where the average number of hours during the 3 week period is greater than 44 hours.
In this example, the average hours you worked over the three weeks is 43.3 hours and you would earn $120 less because you agreed to average your hours over the 3-week period.
How did This Happen?
Premier Ford introduced Bill 66, Restoring Ontario’s Competitiveness Act, 2019, in December 2018. This omnibus bill received Royal Assent on April 3, 2019.
As we wrote about here, Bill 66 impacts several acts, including the Employment Standards Act.
Employment Standards Act (the “ESA”)
- Overtime Averaging
One change to the ESA is an amendment surrounding overtime averaging and an employer’s obligation to pay overtime. Most employees receive overtime pay that is at least 1.5 times his or her regular rate of pay when working beyond 44 hours per week. Prior to Bill 66, if an employer obtained approval from the Director of Employment Standards and entered into a written agreement known as an overtime averaging agreement, then an employee’s hours could be averaged over two or more weeks to determine the entitlement to overtime pay.
Bill 66 has removed an employer’s obligation to seek permission from the Ministry of Labour to enter into an overtime averaging agreement. Now, an employee’s hours may be averaged if there is an averaging agreement between the employer and employee. The one restriction is that the time period where the hours of work are averaged cannot exceed 4 weeks. The result of this change is that employers can reduce, or potentially eliminate, the overtime pay an employee receives. Although this change can reduce payroll costs for employers, it may decrease the protections and compensation for employees working excess hours.
- Working More than 48 hours per week
Another significant change as a result of Bill 66 is the elimination of the need for employers to obtain government approval to allow their employees to exceed 48 hours of work in a work week.
Prior to Bill 66, an employer needed to file an application for approval with the Director of Employment Standards if they wanted an employee to work more than 48 hours in one week. This is no longer a requirement. After the passage of Bill 66 this week, an employer only requires a written agreement with the employee to work these excess hours.
To learn more about the impact of Bill 66 on your rights in the workplace, contact one of our employment lawyers at MacLeod Law Firm at [email protected] or call 647-204-8107.