One of the biggest challenges that global companies face when hiring internationally is understanding payroll rules and employment laws. These laws differ from country to country, and often in unexpected ways. Overtime rules and classifying employees as exempt from them are one of those tricky rules. Getting it wrong can have serious consequences for your business. That’s why so many global companies rely on Employer of Record providers when hiring in Canada, who take on compliance for them.
In this blog, we will go over federal and provincial overtime rules, who should be classified as an exempt or non-exempt employee, and how that affects your business!
Federal Overtime Rules in Canada
Federal overtime rules in Canada set a general threshold of 44 hours per week. Workers who are scheduled or asked to work more than this must be paid overtime. However, some industries have special overtime rules, and some workers are exempt from receiving overtime. These sectors include agriculture and some public sector roles. The rules are different for each industry, so it’s important to check the regulations for your industry.
Provincial Overtime Rules in Canada
The overtime rules in Canada are different depending on which province you are in. The general threshold for overtime in Canada is 40 hours per week but is higher in Ontario (44), Nova Scotia (48), and PEI (48). Like the federal overtime rules, there are also a few industries, such as agriculture and some public sector jobs, where the general overtime threshold is higher. Check the regulations for your industry to see if the general or higher threshold applies to a given job.
| Province | Overtime Rules |
|---|---|
| BC | Time + 1/2 after 8 hours, double-time after 12 (if calculated daily) Time + 1/2 after 40 hours (if calculated weekly) |
| Alberta | Time + 1/2 after 8 hours a day or 44 hours a week |
| Saskatchewan | Time + 1/2 after 8 or 10 hours a day or 40 hours a week |
| Manitoba | Time + 1/2 after 8 hours a day or 40 hours a week |
| Ontario | Time + 1/2 after 44 hours a week |
| Quebec | Time + 1/2 after 40 hours a week |
| New Brunswick | $20.63 (or more) + 1/2 after 44 hours a week |
| Nova Scotia | Time + 1/2 after 48 hours a week |
| PEI | Time + 1/2 after 48 hours a week |
| Newfoundland and Labrador | $21.75 (or more) after 40 hours per week |
| Yukon | Time + 1/2 after 8 hours a day or 40 hours a week |
| NWT | Time + 1/2 after 8 hours a day or 40 hours a week |
| Nunavut | Time + 1/2 after 8 hours a day or 40 hours a week |
| Federal | Time + 1/2 after 8 hours a day or 40 hours a week |
Who Are Exempt and Non-Exempt Employees in Canada?
Exempt employees are those who can be asked or forced, to work overtime above and beyond their normal hours, without receiving overtime pay. Non-exempt employees represent most of the workforce, hourly and salaried alike. Aside from sectors that are exempt from overtime rules, certain job classifications and roles are exempt, including managers and supervisors.
However, understanding overtime rules can be tricky. Unlike in America, overtime rules differ by province and each province has its own rules for who can and cannot receive overtime. In some provinces, it’s clear cut, with managers and supervisors being exempt, along with several sector exemptions. Other provinces have complex tests for who can be qualified as exempt. For example, in Manitoba “employees who substantially control their hours of work and earn more than twice the average industrial wage may be exempt from the hours of work and overtime provisions.”
These complex rules are why so many US employers opt to work with an Employer of Record, who can help keep you compliant when hiring in Canada!
These are our most Frequently Asked Questions regarding overtime rules in Canada:
Can salaried employees get overtime?
Depending on the province, most salaried employees are entitled to overtime. The exceptions are managers and supervisors.
Can hourly employees be exempt?
Yes! Exempt status is not determined by hours of work, but by your industry and the nature of your job. Many hourly workers are employed in industries with broad overtime exemptions, for example, agriculture, fishing, construction, and transportation.
Can an hourly employee be scheduled for overtime?
Yes, hourly employees can be scheduled for overtime, however, if the employee has another responsibility, for example, childcare, the employer cannot schedule workers during this time. Most employers opt to ask workers if they can take on overtime, and do not force it.
Can an employer require overtime? And can a salaried employee be forced to work overtime?
Depending on the province, yes, employers can force salaried employees to work overtime. However, there are limits. For example, in Ontario, an employer can force a salaried employee to work as much as 13 hours a day and 48 hours per week. After that, employees can refuse additional overtime.
Can exempt employees get overtime?
Employees who are considered “exempt” in their province of work cannot receive overtime pay.
Can overtime be banked as a future vacation?
Yes! In most provinces overtime can be banked as future time off, rather than paid out immediately as overtime. However, employers can limit overtime banking with contract stipulations, and employees can opt to receive overtime pay, instead of paid time off.
What if I don’t pay overtime or pay overtime incorrectly?
If you fail to pay overtime or are found to have wrongly denied overtime pay to non-exempt employees, you will be forced to pay all back overtime pay and may have fines levied. Overtime errors are one of the most common forms of wage theft and are not treated lightly.
How an EOR Can Help
Employer of record providers hire your international workers and then lease them back to you to direct. They take on in-country compliance and payroll, allowing you to expand your team without opening a local subsidiary, or hiring a local payroll and HR team. EORs like Canadian Payroll Services stay on top of changes in local employment law and payroll rules and keep you compliant through their many changes.
Let Canadian Payroll Services Manage Your Compliance
Canadian Payroll Services specializes in helping global companies hire compliantly in Canada. Our experienced, local team of certified payroll administrators and HR account managers can advise you on overtime rules for your exempt and non-exempt employees, no matter what province they’re located in, and our local employment law partners can help to classify your employees so there’s no chance of overtime violations.
