How Should Employers Reward Overtime Work?

Guest Blogger

By Guest Blogger

November 9, 2021

Across Canada overtime is seen as a way to earn some extra dollars on top of a basic wage, especially over the holidays. As an employer, you must make sure you track and pay your employees' overtime correctly.

In this article, we’ll discuss the overtime pay rates across Canada, non-financial rewards you can offer for overtime and, the legalities surrounding overtime pay.

What is overtime work?

Overtime work is any hours worked by an employee that exceed their scheduled working hours. As per Statistics Canada, over 2.5 million people work overtime on a regular basis. Overtime is usually offered during a busy shift, or when staffing levels are lower than usual. Overtime is common with hospitality and retail businesses, particularly during the holidays.

What are the rules when it comes to overtime?

The overtime pay rate is consistent across all the Canadian provinces, at 1.5 times an employee's regular hourly pay. But the number of hours needed to work before qualifying for overtime differ slightly.

As an employer, it’s your responsibility to make sure your company matches local legislation.

How to calculate overtime pay correctly

You must ensure you calculate your employees' overtime pay correctly as one of the main reasons for employees working overtime is for the extra pay. 

If you pay your staff’s overtime pay incorrectly, even by accident – it could negatively impact employee engagement and lead to future refusal of overtime. 

Use this simple calculation to work out overtime pay correctly: 

  1. Determine weekly rate: multiply hourly rate by the number of hours worked in a week. For example, $16 hourly rate x 44 hours = weekly pay of $704.
  2. Multiply hourly rate by 1.5: overtime rate is $16 x 1.5 = $24.
  3. Multiply overtime rate by number of overtime hours: If 10 hours overtime, $24 x 10 = $240.
  4. Add regular wages and overtime pay together: $704 + $240 = $944.

Other non-mandatory overtime rewards

Overtime rewards aren’t always about money. While you must pay employees' overtime correctly - there’s nothing stopping you from offering additional incentives to encourage employees to work overtime. These can be seen as a nice perk for your staff, and it shows that you are willing to go that extra mile to appreciate the hard work they put in. 

First, you can always offer financial bonuses that are higher than the mandatory 1.5 times regular overtime pay. 

Alternatively, the following non-financial incentives can also be offered:

  • Extra vacation day following a busy period.
  • Start the next day of work later after overtime was worked or offer an early finish.
  • Gift cards for food or shopping outlets.
  • Provide meals for workers.

The amount of non-financial bonuses and the frequency in which they are offered is important for retaining and attracting the best talent. If staff feel valued and appreciated this can lead to a more positive atmosphere to work in, and ultimately an increase in productivity.

What to watch out for as an employer

As an employer, there are certain actions that can lead to potentially paying overtime wages incorrectly.

You may not intend to avoid paying overtime, but the following activities are common ways people try to skip out on paying more:

  • Carrying overtime hours over into the next working week.
  • Asking employees to perform small tasks off the clock.
  • Asking employees to perform tasks before clocking in or after clocking out such as opening and cleaning up.
  • Automatically deducting time for lunch and breaks.
  • Stating on the sheet that someone is a manager, so they’re exempt from overtime.

If you do these, your employees could report you to employment standards, and you could be faced with compensation to pay - which is usually more than you would have paid them in the first place. 

This practice could also stain your company’s reputation, which may lead to staff leaving the organization or making it difficult for you to attract new employees.

Legalities surrounding overtime pay

You need to be aware of which employees qualify and are eligible to work overtime hours. For example, if an employee has managerial responsibilities within their working day, they do not qualify for overtime. Neither do professions such as lawyers, dentists, or architects. 

According to the Canadian Labour Code, federal law requires employers to pay at the correct rate. If an employee hasn’t been paid correctly for any overtime worked, they may be entitled to compensation. 

Employees can make an employment standards claim against you if they haven’t been paid their overtime correctly. The Ministry of Labour can order employers to pay employees the money they’re owed.
Any claims must be submitted within two years of the date the wages were owed to the employee. 

To summarize, offering overtime is commonplace in Canada and throughout the world. You, as an employer, have a right and responsibility to your employees to ensure you record and pay overtime correctly.

 

This article was provided by BrightHR, HR management software used to cut staff administration, boost productivity, and make your business a success. 

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