Overtime Agreements in Alberta: How to Document and Apply Them

Alberta overtime agreements are written arrangements between an employer and one or more employees that allow overtime hours to be banked as paid time off instead of being paid out at the standard overtime rate. Under Alberta employment standards rules, overtime is all hours worked over 8 hours a day or 44 hours a week, whichever is greater. Without a written overtime agreement, an employer must pay overtime of at least 1.5 times the employee’s regular wage rate for all overtime hours worked. When a written overtime agreement is in place, the employer may instead provide at least 1 hour of paid time off for each overtime hour worked. Any overtime banked under an overtime agreement prior to September 1, 2019 is banked at a rate of at least 1.5 hours for each hour worked. After September 1, 2019, overtime is banked at a rate of 1 hour for each overtime hour worked. Banked overtime must be provided, taken and paid within 6 months of the end of the pay period in which it was earned, unless the agreement is part of a collective agreement that allows a longer period. If the time off is not used as required, the employee must be paid overtime pay of at least 1.5 times the employee’s wage rate for the overtime hours worked. Alberta’s basic overtime rule is that overtime is all hours worked over 8 hours a day or 44 hours a week, whichever is greater. - Daily threshold: hours worked over 8 in a day are counted toward overtime. - Weekly threshold: hours worked over 44 in a week are counted toward overtime. - Overtime is calculated on both a daily and weekly basis, except where special rules require monthly calculation, and the employee is entitled to whichever is greater. If an employer establishes a work week of fewer than 44 hours, such as 40 hours, overtime is still payable under the basic 8/44 rule unless a collective agreement, some other agreement, or the employer’s consistent practice has been established in writing so that overtime hours are counted after working fewer than 8 hours in a day or 44 hours in a week. Alberta employment standards materials describe 2 types of overtime agreements, and employers must give a copy of the written agreement to employees who are covered by it, including new employees. 1. Individual overtime agreements - An individual overtime agreement is between a single employee and an employer. - Either the employee or the employer can cancel or change the agreement by giving the other party one month’s notice in writing. - Alberta provides a sample individual overtime agreement form (ES0004). 2. Group overtime agreements - A group overtime agreement is between an employer and a designated group of employees. - The employer and a majority (greater than 50%) of the employees in the designated group must sign the agreement. - The agreement binds all employees of that particular group. - The employees may be part-time or full-time. - Either the group of employees or the employer can cancel or change the agreement by giving the other party 1 month’s notice in writing. If employees want to cancel, the notice must be signed by a majority of the employees affected. - Alberta provides a sample group overtime agreement form (ES0005). An overtime agreement can also be part of a collective agreement. For overtime banked after September 1, 2019, at least 1 hour of time off must be banked for each overtime hour worked. Any overtime banked under an overtime agreement prior to September 1, 2019 is banked at a rate of at least 1.5 hours for each hour worked. If banked time off with regular pay is not used as required, the employee must be paid overtime pay of at least 1.5 times the employee’s wage rate for the overtime hours worked. Time off with regular pay instead of overtime pay must be provided, taken and paid to the employee within 6 months of the end of the pay period in which it was earned, unless the agreement is part of a collective agreement and the collective agreement provides for a longer period. Examples published by Alberta: - Overtime worked June 1, pay period ends June 30: banked time to be taken by December 31 - Overtime worked August 11, pay period ends August 12: banked time to be taken by February 12 - Overtime worked September 15, pay period ends September 15: banked time to be taken by March 15 If the time off is not used as required, the employee must be paid overtime pay of at least 1.5 times the employee’s wage rate for the overtime hours worked. When banked overtime is used, it must be provided, taken and paid at the employee’s regular wage rate at a time that the employee could have worked and received wages from the employer. Alberta explains this means time off can be provided any time the employee could have been scheduled to work non-overtime hours. To determine how many banked overtime hours can be used in a day or week, the following rules apply: - the total of hours worked in a day plus banked hours taken with regular pay on that day cannot exceed 8 hours - the total