A Step-by-Step Guide to Banked Overtime Requirements

A common search term that we see in Compliance Works is “banked overtime”.  Questions regarding banked overtime include things like, when can overtime be banked and taken as time in lieu instead of paid? What requirements do I have to meet to provide banked time? Are there any limits on banked time? Are the requirements the same in every province where my employees work? Can the same policy apply to all employees in the organization?  These are important questions – and getting the answer wrong can have serious consequences, including leading to class actions.  In this post we provide a step-by-step guide to find these answers – with and without using Compliance Works.

Without Compliance Works

Step 1 – Identify the Legislation

The first step is to identify the right legislation. Banked overtime is governed by employment standards legislation.  The specific Act varies by jurisdiction:

  • Alberta Employment Standards Codebanked overtime
  • BC Employment Standards Code
  • Manitoba Employment Standards Code
  • New Brunswick Employment Standards Act
  • Newfoundland and Labrador Labour Standards Act
  • Nova Scotia Labour Standards Code
  • Ontario Employment Standards Act, 2000
  • Prince Edward Island Employment Standards Act
  • Quebec Act Respecting Labour Standards
  • Saskatchewan The Saskatchewan Employment Act
  • Canada Labour Code

We’ll use the Ontario legislation as the example as we go through the rest of the steps.

Step 2 – Identify the Relevant Sections

Once you have identified the Act that applies, you need to identify all of the relevant sections in the Act.  When looking at banked time, it’s important to look at all of the provisions related to overtime.  When reviewing the legislation you want to consider:

  • what is the threshold number of hours when overtime becomes payable?
  • is an employee entitled to a greater payment for working overtime, and if so, what is that rate?
  • can overtime be banked or taken as time in lieu instead of being paid?
  • if so, are there any conditions or requirements that must be met for employees to bank time?
  • are there any exceptions to the general rules that apply in your circumstances?

In Ontario, those provisions are found in section 22 of the Act.  Sections 22(1) and 22(1.1) provide that employers must pay overtime for each hour of work in excess of 44 hours per week and the overtime pay rate must be at least 1.5 times the employee’s regular rate.  These provisions give you the basic information that you need to know about overtime, but they don’t address banked time.

Sections 22(7) and 22(8) allow for banked time, although the Ontario legislation doesn’t use the term “banked time”.  It refers to time off in lieu of overtime pay.  These sections provide that employers and employees can agree to time off in lieu of overtime pay at a rate of 1.5 hours for each hour of overtime worked.  Generally, paid time off must be taken within 3 months of the work week in which the overtime was earned, but if the employee agrees, that time period can be extended to 12 months.

It is important to pay careful attention to the specific requirements in each province.  For example, in some provinces, the agreement to bank time must be in writing and a copy of the agreement must be given to employees.

Step 3 – Identify Relevant Regulations

An easy mistake to make when looking at legislation is to ignore the regulations.  It can often seem that the Act provides the full answer, so you think that your work is done.  That can be a serious mistake.  If we go back to our Ontario example, most of the requirements are found in the Act, but the regulations exempt many occupations or industries from the overtime requirements, including the provisions that deal with banked time.

There are 17 regulations under the Employment Standards Act, 2000.  It is important to look at each of the regulations to determine if they might be relevant.  In this case, Reg. 285/01, which is called When Work Deemed to be Performed, Exemptions and Special Rules, applies to overtime – probably not an obvious regulation to look at based on its name. Sections 2, 8 and 15 of this regulation exempt a number of different occupations or industries from overtime requirements.

Step 4 – Identify Special Rules and Repeat the Process

Once you have determined the general requirements, you will need to make sure there are no special requirements that apply to your particular employees or industry.  Exemptions and special rules are found throughout the Act and the Regulations.  In your initial review of the Act and regulations you may have come across some of these, but they are sometimes buried.  Be sure to read the Application sections of both the Act and the regulations.  Don’t assume that the same rules will apply to all of your employees.

If you have employees in more than one province, you will need to go through this process for each province.  The laws in each province are different.  And finally, the law is always changing, so make sure you check back from time to time to make sure the requirements haven’t changed.

With Compliance Works

banked overtimeFor our Compliance Works subscribers, all of the above work has been done for you.  If you are looking for information on banked time in Compliance Works, take the following steps within Report Builder:

  • Select Employment Standards as your Area of Law
  • Select Hours of Work as your Topic
  • Select Overtime Agreements as your Provision
  • Select the jurisdiction(s) that apply.  Remember you can select multiple jurisdictions and you can use the Compare Jurisdictions feature to see a side-by-side comparison of each province’s requirements.

And remember that if you add this provision to a Report or if you have Hours of Work included in your Watchlist, you will receive notifications when there are changes to these requirements.