Every province in Canada has standard workday hours. These hours are the stipulated duration every worker is expected to work for. Anything exceeding that hour is considered overtime. And for every overtime hour, your employer is expected to pay you. So how do you know what your overtime pay is and how much you are entitled to?
Overtime Pay in BC
Generally, overtime pay is money paid to employees who work above their standard work hours. Employers must pay overtime even if the employee declines or does not claim it. Overtime must be paid regardless of how an employee is paid, whether hourly, monthly salary, annual salary, or commission earnings.
In British Columbia (BC), the standard workday is 8 hours and 40 hours for a workweek. Once an employee exceeds these work hours, overtime is payable. And when calculating the overtime pay, both the numbers of hours worked in a day and weeks must be considered.
According to BC Employment Standards, a week starts from Sunday and ends on Saturday. Hence, there is both a daily and weekly limit for overtime pay. Employees are entitled to 1½ times their regular pay rate.
This pay is applicable only if they work over eight hours a day or more than 40 hours in a week. However, if they work over 12 hours a day, their pay increases x2 of their regular rate every hour.
The daily and weekly comes in handy because even if an employee doesn’t meet the eight hours per day overtime threshold, they could work more than five days a week.
This means that the total number of hours they worked during the week would be more than 40 hours. In a case like this, even if the employee(s) does not meet the daily overtime limit, they would still qualify for overtime because they reached the weekly overtime threshold.
Overtime pay is also applicable during public holidays. Employees in BC are entitled to 1½ times their regular pay rate for overtime hours worked on a statutory holiday (New Year’s Day, Family Day, Good Friday, Victoria Day, Canada Day, B.C Day, Labour Day, Thanksgiving Day, Remembrance Day, and Christmas Day).
Overtime Pay Exemptions
There are special rules and exemptions governing employees who can receive overtime pay in Canada. Generally, management and unionized employees are exempted from overtime pay. Other industries and professions exempted from overtime pay in BC include:
- Oil and gas workers
- Forestry workers
- Transportation workers
- High tech worker
How to Calculate Overtime Pay in BC
Calculating overtime pay in BC can be confusing as there is a daily and weekly overtime pay limit.
- Daily Overtime Pay
Once an employee works eight hours a day, he/she is entitled to a 1.5x of their regular pay rate for any work over 8 hours up to 12 hours in a day. Also, the employee is entitled to 2x their standard pay rate for all hours worked over 12 hours in a day. Note that this overtime pay rate is applicable even if the employee works less than 40 hours a week.
Below is an example to simplify how to calculate daily overtime pay in BC.
Bella works in the administration sector, and she makes CA$40.00 per hour. Below is how Bella worked in a day:
Hours of Overtime Pay at 1.5x
Hours of Overtime Pay at 2x
From the table above, we can deduce that Bella worked a total of 6 hours of overtime. One of the overtime was during a shift that exceeded 12 hours. Hence, Bella’s overtime pay can be calculated as follows:
- Regular pay: 38 hours x CA$40.00 = CA$1,520
- Overtime pay – shift below 12 hours: CA$40.00 x 1.5 = CA$60.00 per hour
The total overtime shift beneath 12 hours is 5hours; that is – CA$60:00 x 5 hours of overtime = CA$300.00. Bella is entitled to receive CA300.00 as overtime pay for shifts below 12 hours outside her regular income.
- Overtime pay – shift above 12 hours: CA40.00 x 2 = CA$80.00 per hours of overtime
The total overtime shift above 12 hours is 1 hour: CA$80.00 x 1 hour of overtime = CA$80.00. Bella is entitled to receive CA80.00 as overtime pay for shifts above 12 hours outside her regular income.
Collectively, Bella’s total overtime pay is – CA$1,520 + CA$300 + CA$80 = CA$1,900
- Weekly Overtime Pay
Let’s review how to calculate overtime pay if a worker works more than 40 hours a week. For example, James works in the communication sector and earns CA$50 per hour. Below is how many hours James works in a week:
Hours of Overtime Pay at 1.5x
Hours of Overtime Pay at 2x
From the table above, we can deduce that James did not work over eight hours in a single. However, he worked over 40 hours a week. So, below is how we’ll calculate James overtime pay:
- Regular pay: 40 hours x CA$50.00 = $2,043
- Overtime pay – shifts below 12 hours: CA$50.00 x 1.5 = CA$75.00 per hour of overtime
The total overtime shift beneath 12 hours is 9hours; that is – CA$75:00 x 9 hours of overtime = CA$675.00.
In total, James’s total one week overtime pay is – CA$2,043 + CA$75.00 + CA$675 = CA$2,793.
- Rest Period Overtime Pay
Alongside daily and weekly overtime pay, there is rest period overtime pay. That is when employees work during their rest period. Employers must pay employees overtime pay for working during their rest period.
In British Columbia, every employee is entitled to an average of 32 hours in a row free from work every week. So, if an employee works during this period, they must be 1½ times their regular pay rate.
For instance, if Ray works seven days a week, he is entitled to 1½ for one of those days even if he works less than 40 hours in total. This is possible because he worked through 32 hours of his rest period. In Jay’s case, he is entitled to a 1½ pay for the day with the fewest hours worked.
Overtime Payment Agreement
There are currently two ways to receive overtime pay. They include:
- Averaging Agreements
Average agreements involve both parties (employer and employee) agreeing to average the employee’s hour of work for a week or more. This is done to determine the pay the employee is entitled to receive.
For instance, an employee can agree with an employer to work up to 12 hours a day, averaging 40 hours a week without being paid overtime.
Employers must pay all employees working under the averaging agreement 1.5x their regular pay rate for hours worked outside the schedule(after 8 hours in a day).
Both parties must put the following in place to validate the agreement:
- All agreement must be in writing
- Both parties must stipulate the week duration over which hours will be averaged on the contract.
- All schedules for each day covered by the agreement must be stated.
- The employer and employee must state the number of times they may repeat the agreement.
- Both parties must state clearly the start and end date for the contract
- Both parties must sign the agreement before the start date
- The employee must receive the contract before it becomes effective
Bear in mind that the averaging deal does not have to be filed with the Employment Standards Branch.
- Banked Time
Agreement for banked time involves an employee making a written request to create a time bank and credit overtime pay for future paid time off. To be effective, the time bank must be equal to the employee’s payment for working overtime hours. For instance, if an employee works 10 hours of overtime in one day, they would earn 3 hours of overtime. That is 2 hours of overtime x 1.5 their regular pay rate, making it 3 hours of banked time.
An employer can close an employee’s time bank with a month of written notice for the agreement. Once this is done, the employer must do one of the following within six months:
- Permit the employee to utilize all the credited overtime pay to take paid time off
- The employer must pay the employee all of the overtime pay credited to the timebank.
- The employee must be paid a part of the payment credited to the time and must use the rest of the credited overtime pay to take paid time off.
Regardless of whether you run a small business or a big organization, it is crucial To understand what overtime pay is in B.C. This is to ensure that your business/organization is compliant with the province’s Employment Standards.
Bear in mind that if you are overworking your employees without proper compensation, you could be sued. So it is advisable to ensure that your employees are receiving adequate payment for their overtime work.