Employment standards rules – Averaging arrangements

Basic rules

• Averaging arrangements allow employers to schedule an employee, or group of employees, to work longer hours per day paid at the employee’s regular wage rate.
• An employer may require or permit an employee or a group of employees to work an averaging arrangement.
• The employer will average an employee’s hours from 1 to 52 weeks to determine overtime pay or time off with pay.
• Extending the averaging period for averaging arrangements beyond the 52-week maximum requires a Ministerial or Director’s variance or exemption.
• An employer must give each affected employee 2 weeks’ written notice before the averaging arrangement starts, unless both parties agree otherwise.
  • An employer does not have to give 2 weeks’ written notice to a new employee if they have given written notice to that employee before employment began.
• The Director of Employment Standards may cancel an averaging arrangement and must notify the employer of the cancellation.

Hours of work averaging arrangements

Hours of work averaging arrangements can be between an individual employee or groups of employees and their employer.

Averaging arrangement requirements

An employer may require or permit an employee or a group of employees to work an averaging arrangement.

• Averaging arrangements may be entered into as part of a collective agreement.

An employer must give each affected employee 2 weeks’ written notice before the averaging arrangement starts, unless both parties agree otherwise.

• An employer does not have to give 2 weeks’ written notice to a new employee if they have given written notice to that employee before the employment began.

If there is no collective agreement in place, the averaging arrangement must meet all the criteria below:

• Be in writing.
• Specify the number of weeks over which the hours will be averaged.
  • The averaging period must not exceed 52 weeks unless authorized by a Ministerial or Director’s variance or exemption.
• Include a schedule setting out the daily and weekly hours of work for the averaging period.
• Specify the manner in which overtime pay and time off with pay instead of overtime pay will be calculated.
• If applicable, include a statement that the employer may amend the schedule for any of the following:
  • The way in which the employer will amend the schedule of daily and weekly hours of work.
  • The amount of notice required to be given to the employee.
  • How notice is given (verbally or in writing).

Notice requirements

Before the arrangement starts, employers must notify each affected employee in writing 2 weeks in advance.

The employer must meet all of the following notice requirements before the arrangement starts:

• Provide a copy of the averaging arrangement to each employee to whom the averaging arrangement applies.
• If the averaging arrangement applies to a group of employees, post the averaging arrangement:
  • on the employer’s internal website (if applicable), and
  • in one or more places in the workplace where it is clearly visible and all the affected employees can view it.
• For new employees, or employees who become a member of a group to which an averaging arrangement applies, an employer must provide a copy of the averaging arrangement as soon as possible after an employee begins employment.

Note: Collective agreements can set out different methods on how copies of averaging arrangements must be given to employees.

Scheduling of an averaging arrangement

• Unless a collective agreement provides otherwise, the arrangement must set out a schedule of the daily and weekly hours of work for the averaging period.
• An employer may only amend the scheduled daily and weekly hours of work.
• When changing from one shift to another, an employer must give at least 24 hours’ written notice to all affected employees.
• When changing from one shift to another, an employer must give 8 hours of rest between shifts.
• The 24 hour notice requirement for shift changes doesn’t always apply. The requirement is waived if the schedule was amended because:
  • an accident has occurred,
  • urgent work is necessary, or
  • other unforeseeable or unpreventable circumstances exist.

The employer may also amend the schedule if the averaging arrangement specifies:

• The way in which an employer will amend the schedule of daily and weekly hours of work, and/or
• The amount of notice required to be given to the employee for schedule changes (if less than 24 hours) and/or
• How the notice must be given (verbally or written).

Where a collective agreement provides otherwise, a requirement to change from one shift to another must be in accordance with the collective agreement.

Overtime

Overtime is calculated on a daily or averaging period basis. Employers can choose one of the 2 options.

Daily overtime

An employee is entitled to overtime under an averaging arrangement if their hours of work exceed:

• 8 hours a day (if scheduled for less than 8 hours), or
• daily scheduled hours (if 8 or more hours were scheduled), or
• the hours specified in the averaging arrangement.

Averaging period overtime

An employee is entitled to overtime under an averaging arrangement if their hours of work exceed:

• 44 hours a week (in a 1-week averaging period), or
• an average of 44 hours a week (in a multi-week averaging period).

Overtime thresholds

• Employers can set their own threshold for daily overtime.
• Employers can remove the employee’s entitlement for daily overtime.
  • If removing or modifying daily overtime thresholds, employers must include those details in the written arrangement.
• If employers choose to remove the daily overtime entitlement they still have to pay averaging period overtime.
• Collective agreements can establish different overtime rules.

Payment of overtime

• Overtime must be paid as one of the two options below, whichever is greater:
  • The employee’s total daily overtime hours
  • The employee’s total averaging period overtime hours
• Daily overtime (if applicable) is payable 10 days after the end of the pay period in which it was earned.
• Averaging period overtime is calculated at the end of each averaging period.
• At the end of each averaging period, if the averaging period overtime is greater than the daily overtime already paid to the employee, the remaining overtime is payable 10 days after the end of the pay period in which the averaging period ends.
• If employers choose to remove the daily overtime entitlement they still have to pay averaging period overtime.

Banking overtime

If an employer and employee agree to time off with pay instead of overtime pay, overtime hours are banked at a rate of at least 1 hour for each overtime hour worked. See Overtime hours and overtime pay for more information.

Termination or end of arrangement

If, before the end of the averaging period, the averaging arrangement:

• is cancelled
• is cancelled and replaced, or
• ceases to apply to the employee (including if the employee’s employment terminates)

The averaging period overtime hours are calculated as if the employee worked the remaining scheduled shifts in the averaging period (daily or averaging period rules apply).

Cancellations to Hours of Work Averaging Arrangements

During, or at the end, of an averaging period an employer may, with at least 2 weeks’ written notice to each affected employee:

• Cancel the averaging arrangement
• Cancel the averaging arrangement and require the employee or group of employees to work a different averaging arrangement.
• The employer is not required to provide at least 2 weeks’ written notice if:
  • an accident has occurred
  • urgent work is necessary, or
  • other unforeseeable or unpreventable circumstances exist

If there is a collective agreement that states otherwise, cancellations to averaging arrangements must be in accordance with the collective agreement.

Cancellation of an averaging arrangement by the Director of Employment Standards

The Director of Employment Standards may cancel an averaging arrangement at any time after considering any factors the Director deems relevant.

If the Director cancels an arrangement, the employer will be notified and can appeal the Director’s decision. See Filing an appeal for more information.

Averaging arrangement complaints

An employee under an averaging arrangement may file a complaint against an employer for failure to pay wages or overtime pay, or both, at any time while the averaging arrangement applies to the employee, or within:

• 6 months after the date the averaging arrangement ceases to apply to the employee, or
• 6 months after the date the averaging arrangement ended.

Samples and examples

Resources are available to assist employers, including:

• sample individual averaging arrangement
• sample group averaging arrangement
• guided examples of averaging calculations

For more information see, the Employment Standards tool kit for employers – Module 5: Averaging arrangements.

Previous arrangements and agreements

How the law applies

Part 2, Section 23.1 of the Employment Standards Code and Part 2, Division 1 and Division 2 of the Regulation outline the rules for averaging agreements.

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