Overtime agreements | DrumhellerMail
Last updateTue, 23 Jul 2024 1pm

Overtime agreements


Dear Working Wise:

I had to lay some staff off about six months ago and now business has picked up a bit. I am not confident enough to re-hire my old staff yet, but I’m paying the people I have a lot of overtime. Can I give them “time in lieu”? Can I limit how much or how long can my staff keep their earned overtime? Signed, Overwhelmed by Overtime.


Dear Overwhelmed:

For most employees, overtime is all hours worked in excess of eight hours a day or 44 hours a week. Overtime is calculated both on a daily and weekly basis. The higher of the two numbers is overtime hours worked in the week.

Some types of employees are exempt from the hours of work and overtime standards. Farm workers, domestic employees, salespeople, professionals, police, and managers are just a few of the classes that are exempt. For a complete list of exempt occupations and occupations with differing overtime rules, click on Alberta’s Standards at: www.employment.alberta.ca/employmentstandards.


For all other employees, overtime must be paid at the rate of at least 1.5 times the regular wage rate. The only exception is when the overtime is accumulated under an overtime agreement.


Overtime agreements allow employers and employees to replace overtime pay wholly or partly with paid time off.

An overtime agreement allows overtime hours to be banked and later taken off with pay during regular work hours. There are a number of rules that apply with respect to overtime agreements:

·         The agreement can be between an employer and a single employee, with a group of employees, or the agreement can be part of a collective agreement.

·         Overtime hours are calculated the same way under an overtime agreement as they would be if overtime pay is to be paid at time-and-a-half.

·         The Code requires an overtime agreement to be in writing. Employers must give employees who are covered by an overtime agreement a copy of the agreement.

·         Time off must be taken within three months of the end of the pay period in which the overtime was earned.

·         If banked time off is not taken off within three months, then it must be paid out at time-and-a-half.

Employers can not create a “use it or loose it” type rule for banked overtime. Overtime can not be lost or taken away even if your overtime agreement says that it can. The employer must keep track of the banked overtime and how long it has been in the bank. However, the employer can tell the employee when to take their banked time off.


Check out the Overtime and Overtime pay section under Alberta’s Standards at: www.employment.alberta.ca/employmentstandards for more information on overtime agreements – including sample agreements you can follow to create your own agreement.


Employers with special circumstances, e.g., seasonal industries, may apply to Employment Standards for a permit to extend the period of time that overtime can be banked.


For more information on Alberta Employment Standards or how to apply for an exemption permit:


Call: 1-877-427-3731

Visit: www.employment.alberta.ca/employmentstandards.

Learn: take the free online Employment Standards course for employers and employees available on our web site under Education & Promotion.


Do you have a work-related question? Send your questions to Working Wise, at charles.strachey@gov.ab.ca. Charles Strachey is a regional manager with Alberta Employment and Immigration. This column is provided for general information.

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