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Overtime Payment in Ontario: Salaried Employees

Whitten and Lublin | May 17, 2018

In Ontario, non-managerial/non-supervisory roles are subject to overtime pay provisions in most cases as per the Employment Standards Act (2000). In Ontario, overtime payment is owed for hours worked in excess of 44 per week. However, there are some scenarios that may lead to questions regarding how to calculate overtime pay. The following are examples of more common methods of pay and overtime implications:

One way pay may be calculated is by providing an employee with an annual salary divided by the amount of pay periods within the year without a set amount of required weekly hours. In this instance, employees’ overtime payment will be bound by the provisions of the Employment Standards Act (ESA). As such, an employees’ weekly earnings will be divided by 44, and overtime will be one-and-one-half (1.5) times this amount.

Conversely, if an employees’ salary is paid in equal installments but with a set amount of hours, then an employer will have to make the necessary adjustments in order to comply with the ESA. For instance, if the set hours are 36 per week, then hours worked in excess of 44 will be paid at one and one-half times the weekly salary divided by 36 hours. For hours between 36 to 44 in the week, employees will be owed at least their average hourly rate. This can either be in writing or by common practice, which would form an implied contract. If an employer offers a greater benefit than the provisions in the ESA, then the employee is entitled to this greater benefit.

Lastly, if an employee is earning an hourly rate and a commission, their overtime rate must reflect this. This requires all monies earned during non-overtime hours to be divided by the total non-overtime hours. The overtime rate would, therefore, be one-and-one-half this amount.