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Overtime entitlement: Employee travel

Under the Employment Standards Act, 2000 (ESA) and Ontario Regulation 285/01, “work” is deemed to be performed when an employee is travelling on business, even if that time is non-productive and outside normal business hours. Here are some ways to minimize that liability.

overtimeUnless an employee is exempt from overtime, such as a manager, IT professional or a commissioned salesperson, the ESA and its regulations mandate that any time a person spends travelling on business (other than a normal commute) is time “worked” for the purposes of determining employee overtime entitlement.

That means that an employee who is required to fly to another city on business generally must be compensated for the travel to the airport, the time spent waiting at the airport, the time on the plane and the time getting to the final destination upon arrival. This can be frustrating for employers as employees may be accruing significant amounts of overtime, while performing little or no productive work for an organization.

As a result, employers would be wise to (re)assess their policies and procedures surrounding business travel to help minimize their overtime liability. While it may be impossible to outright eliminate overtime accrual, employers interested in limiting overtime pay should consider the following strategies:

  1. Time off in lieu of overtime: If an employee agrees in writing, an employer may provide an employee with paid time off in lieu of overtime pay, which is to be provided at 1.5 hours for each hour of overtime worked.
  2. Averaging agreements: Under an averaging agreement, an employee’s hours of work may be averaged over two or more consecutive weeks for the purposes of determining overtime entitlement. This may have the effect of diluting overtime liability as the extra hours an employee works in one week may be spread over a specified number of weeks.
  3. Scheduled days off in the work week: Employers may provide an employee with days off in the work week so as to avoid having the employee exceed the statutory overtime threshold. For example, if you are aware that an employee will be doing 8 hours of business travel on a Sunday, consider having that employee take the previous Friday off in order to keep the total hours worked under the 44 hour weekly threshold.
  4. Lower wage rate for travel: Depending on the circumstances, employers can pay employees at a lower wage rate for time spent travelling on business, particularly if the time is non-productive. By taking this approach, overtime entitlement would be calculated at the employee’s average rate, thus reducing overtime liability. Employers would be wise to introduce this approach at the outset of the employment relationship as unilaterally imposing such a condition during the course of employment could result in employee resistance and possible issues of constructive dismissal. Employers must also be careful to ensure compliance with minimum wage requirements.

In a nutshell, employers can and should be proactive in managing their overtime obligations and potential liability as it relates to business travel.

By: Matthew Demeo, McCarthy Tétrault LLP

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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