A couple of weeks ago, we blogged about the newly updated policies set by Alberta’s Employment Standards Code. As we noted, the changes were the first ones made in 30 years. As a result, business owners all over Alberta were required to quickly update their company policies to reflect the changes made by the Alberta Government. In this week’s blog, we’d like to focus on one of those very important changes.
Have you updated your overtime policy?
As per the defined rules regarding overtime on Alberta.ca, all employees are entitled to overtime pay, with some exemptions for certain industries and professions. The standard rule is that all hours worked over 8 hours a day or 44 hours a week (whichever is greater) are considered overtime hours. This is known as the “8/44 rule”.
Unless there is a separate written overtime agreement in place, an employer is required to pay an employee overtime pay of at least 1.5 times the employee’s regular wage. For example, if an employee’s hourly wage is $20, his/her overtime pay must be calculated at $30 per hour. However, individuals who work overtime don’t necessarily need to be paid in dollars and cents. They can earn what is known as “banked overtime”.
What is banked overtime?
Banked overtime refers to time off work with pay. Prior to the changes made to Alberta’s labour standards, employers could allow their employees to bank their overtime and take the time off on another day – but it would be as straight time. In other words, if an employee worked six hours of overtime and decided to bank it, he/she could take six hours off on another day and receive his/her same hourly wage for that time off.
The new rules specify that banked overtime is now given at the same rate it was earned – 1.5 times the regular wage.
Additionally, the Alberta Government website explains, “employees must use up banked overtime within 6 months of the end of the pay period in which they earned it” Previously, employees were required use their banked time within 90 days. The final outcome has not changed, if the employee has not taken the time in their bank within 6 months the employer must pay it out.
As a business owner, it’s important that you update your company policy to reflect the changes made to the rules regarding overtime pay. If you have any questions as to how to appropriately update your company policy to reflect these new changes, please give Hire Value Inc. a call at 403-978-3827.