In Ontario, the Employment Standards Act, 2000 (Ontario) (the “ESA“) sets the rules on how much overtime employees can work, and how they must be compensated for their overtime.


Most employees are eligible for overtime pay, whether they are full-time, part-time, temporary or casual workers, students or contract workers. It does not matter whether the employee is being paid on an hourly or salary basis in order for the individual to qualify for overtime pay. Under the ESA, overtime pay accrues after the employee has worked 44 hours in a work week. Overtime pay is equal to at least 1½ times the employee’s regular rate of pay (time and a half).


Under the ESA, certain categories of employees do not qualify for overtime pay. These categories include: managers and supervisors, and commissioned salespeople.

Managers and supervisors do not qualify for overtime pay if the work they perform is managerial or supervisory and they perform any non-supervisory or non-managerial tasks on an irregular or exceptional basis. As a general rule, “supervisory or managerial” means that the employee has the authority to hire, fire, and grant time off, or that the employee participates in substantial decisions that affect the employer’s operations and budgeting.

Salespersons who are entitled to receive all or any part of their remuneration as commission and who normally sell goods or services away from their employer’s place of business also do not qualify for overtime pay under the ESA.


Pursuant to Subsection 22(7) of the ESA, an employee may be compensated for overtime hours by receiving one and one-half hours of regular paid time off for each hour of overtime worked in lieu of overtime pay if:

  1. the employee and the employer agree to do so; and
  2. the paid time off work is taken within three (3) months of the work week in which the overtime was earned or, with the employee’s agreement, within 12 months of that work week.

In other words, if the employer and the employee enter into an overtime banking agreement, the employer may establish a time bank for overtime worked. Once the time bank is established, the employer must credit the employee’s overtime wages to the time bank instead of paying them to the employee within the regular time frame for paying wages. Under the ESA, the employee must receive at least 1½ times paid time off for all hours worked in excess of 44 hours per week. By way of example, if an employee works 48 hours in one week he must receive 6 hours of paid time off at his regular rate of pay for the 4 hours of overtime worked (i.e. 48 hours minus the 44 hour overtime threshold). With the employee’s agreement, any overtime wages that accrue in the time bank must be taken within 12 months of the work week in which the overtime was earned. If there is no agreement, the employee must take paid time off within three months of the work week in which the overtime was earned.


Where the employment of the employee is terminated before all “banked” overtime hours have been taken, subsection 11(5) of the ESA requires that the employer pay the employee overtime pay for the overtime hours that were worked not later than the later of:

  1. seven days after the employment ends; or
  2. the day that would have been the employee’s next pay day.


Employees are not required to work more than 48 hours per work week. However, an employer and an employee can agree in writing that the employee will work more than 48 hours in a work week (and even in excess of 60 hours per work week). If the employer and the employee wish to enter into an agreement requiring the employee to work more than 48 hours per week, the employer must comply with each of the following steps in the order set out below:

  1. Prior to entering into any agreement, the employer must first provide the affected employee with a copy of the handout Information for Employees About Hours of Work and Overtime Pay (the “Information Sheet“). This was prepared by the Director of Employment Standards which describes the hours of work and overtime rules in the Employment Standards Act. A copy of the Information Sheet may be obtained at the Ontario Ministry of Labour website at;
  2. The employer must then obtain a written agreement from each affected employee. The agreement must contain a statement to the effect that the employee acknowledges receipt of the Information Sheet; and
  3. The employer must apply for and obtain approval from the Ministry of Labour’s Director of Employment Standards (the “Director“). The employee cannot work more than the number of hours approved by the Director. Notwithstanding any written agreement to the contrary, the employer has an obligation to pay overtime for every hour the employee works in excess of 44 hours per work week.


An employer and an employee may enter into an agreement to average the employee’s hours of work over a specified period of two or more weeks for the purposes of calculating overtime pay. Under such an agreement, an employee would only qualify for overtime pay if the average hours worked per week during the averaging period exceed 44 hours. For example, if the agreed period for averaging an employee’s hour of work is four weeks, the employee is entitled to overtime only after working 176 hours during the four weeks worked (i.e. 44 hours x 4 weeks = 176 hours).

The term of the averaging agreement is not valid unless it provides for an expiry date which is less than two years after the date the agreement takes effect. The employer and the employee may, however, agree to renew or replace an existing averaging agreement.

In addition to enter into an averaging agreement, the employer must also apply and obtain approval from the Director of Employment Standards to average hours of work for overtime pay purposes.