Termination of Employment, Notice and Pay in Lieu of Notice
February 27, 2019
A poor performance cannot be the cause of termination – Toronto Employment Lawyer
March 12, 2019

Article No. 18


Part VIII of the Employment Standards Act of Ontario (the “Act”) requires that an employer provide overtime pay of at least one and one-half times the regular hourly rate for work performed in excess of 44 hours per week. Where the parties have agreed to a regular workweek of less than 44 hours, overtime will be owing for hours worked in excess of the regular schedule of hours. For individuals whose Employment Standards entitlements are governed by the Canada Labour Code, overtime pay is owing for hours worked in excess of 40 hours per week or at a lower threshold where such is agreed to.  This article focuses on the provisions of the Act.      

An employer is obliged to pay overtime to hourly-paid and salaried employees alike.   The overtime rate for hourly paid employees is a simple calculation. In the case of salaried employees, the formula is based on weekly earnings divided by non-overtime hours actually worked times the overtime premium of one and one-half times. 

Where hours of work vary from week to week, the employee and the employer may enter into an “averaging agreement” subject to the terms set out in the Act for the purpose of determining overtime eligibility. In the absence of such an agreement, the employee will be entitled to overtime pay where their hours exceed 44 in a particular week even if in other weeks their hours fail to meet the overtime threshold.

The parties may also enter into an agreement whereby overtime is not compensated by overtime pay but by paid time off at one and one-half times the number of overtime

hours worked.

The Act requires employers to keep records of the hours worked by an employee during the course of a week and to retain such records for at least three years following

that employee’s termination. It is a fact, however, that many employers do not keep

such records. Employees are therefore advised to maintain detailed records of their hours of work, which record should be made at the time the hours are worked. In such circumstances, the log kept by the employee will be the best evidence available for determining overtime compensation owing.

While employees and employers can contract to provide for overtime compensation on terms which exceed the entitlements under the Act, they cannot agree to waive or forego entitlement to overtime as set out in the Act.  Any such agreements are not enforceable.

The Act exempts several categories of workers from overtime eligibility. These include but are not limited to, various professionals, firefighters, taxi and ambulance drivers, superintendents or janitors who reside in the building where they are employed, and many salespersons who earn commissions on sales concluded away from the employer’s place of business. Individuals whose work is supervisory or managerial in character may or may not qualify for overtime compensation depending on the extent to which they also perform non-supervisory or non-managerial tasks.

An employee may seek to enforce his or her right to overtime by one of two means.  The employee may either:

  • bring a claim for overtime, under the Employment Standards Act to the Ontario

Ministry of Labour; or

(2)    bring a civil action for overtime pay owing. In Kumar v. Sharp Business Forms Inc.  a 2001 decision of the Ontario Superior Court of Justice, the Court ruled that the provisions of the Act, including those regarding overtime, are implied terms of every contract of employment and the failure of the employer to pay overtime owing, constitutes a breach of contract, damages for which are recoverable by way of a civil action. At common law, an individual may seek damages for overtime extending over a two-year period prior to the filing of the claim.  In the decision of Abdelshahid v. Schiffenhaus Canada Inc., a proceeding of this firm,an Ontario Court, for the first time we believe, awarded civil damages for loss of overtime pay.

Is a “supervisor” entitled to overtime?  Is a salaried employee entitled to overtime?  Does the contract of employment bear on an individual’s entitlement to overtime?  How far back can an employee go in seeking damages for loss of overtime?  What is the value of an overtime claim?  If proceeding with a claim for overtime, is an individual better off bringing an employment standards claim to the Ministry of Labour or a civil claim for breach of contract?  The law in Ontario on these issues, as in so many other areas, is evolving and individuals who are considering bringing an overtime claim are well advised to contact an employment lawyer before commencing legal action.