I’m on Salary. Does That Mean I Don’t Get Overtime?
Employees can be paid hourly, on commission, or receive a salary. Employees and employers often are curious as to overtime entitlement. Many assume that when an employee is “on salary”, they are not entitled to overtime. Importantly, however, this is only true where the salaried employee is a manager (not just in title, but in fact and in law).
The Employment Standards Act, 2000 is a piece of legislation that sets out the minimum standards governing employment relationships in Ontario. It defines an “overtime hour” as:
if one or more provisions in the employee’s employment contract or in another Act that applies to the employee’s employment provides a greater benefit for overtime than Part VIII (Overtime Pay), an hour of work in excess of the overtime threshold set out in that provision, and otherwise, an hour of work in excess of the overtime threshold under this Act that applies to the employee’s employment
Essentially, overtime is defined as any number of hours over the number of hours provided for in the employee’s contract. Therefore, if the employee’s contract states that she is entitled to overtime after 38 hours, then that threshold applies. If the employee’s contract does not set a threshold, then the threshold set out in the legislation applies. The Employment Standards Act, 2000 goes on to set that minimum threshold at 44 hours. After the threshold, the employee is entitled to her rate of pay at least one and a half times the regular pay rate.
The Employment Standards Act, 2000 overtime provisions do not distinguish between employees who are on salary and those who are paid hourly wages. Therefore all employees, regardless of how they are paid, are entitled to overtime. This is in the form of cash monies, or with their permission, time off in lieu at one and a half-times the number of overtime hours worked. For example, if you worked 2 hours of overtime, you would be entitled to 3 hour’s wages or 3 hours’ time off.
There are exceptions to the rules regarding overtime. Professionals, such as doctors, lawyers, and architects are not entitled to overtime. The most important exception though is with respect to managers. To be clear, employers cannot avoid overtime obligations by simply classifying staff as “managers”, rather these employees must exercise managerial functions, such as:
- having a high degree of autonomy, discretion, and independent action;
- dealing with matters of importance to the business as a whole;
- hiring and firing staff;
- supervisory control over other employees; and
- acting on behalf of management in labour relations.
It is critical to note that overtime is mandatory. Employers and Employees cannot “contract out” or agree not to follow the overtime provisions, nor can Employees be reprimanded or disciplined for making inquiries about overtime entitlements. The rules surrounding overtime are complex and not readily apparent. If you have questions regarding overtime, you may want to consult an employment lawyer or the Ministry of Labour.