New Requirements for Hours of Work Averaging Arrangements

New Requirements for Hours of Work Averaging Arrangements

By Dylan Snowdon

Substantial changes to Alberta’s Employment Standards Code (the “Code”) will be coming into force on January 1, 2018 (details here).1 This article highlights and explains an important change that impacts the rules regarding overtime and how they impact employees with compressed work week arrangements.

Currently, compressed work week schedules are permitted in section 20 of the Code, and allow for significant flexibility for employers. Section 20 allows employers to require or permit employees to work a compressed work week, consisting of fewer work days in the work week and more hours of work in a work day, paid at the employee’s regular wage rate. Overtime is credited if applicable, taking into account the hours worked over the periods of compressed work schedules.

Under the changes to the Code, employers will no longer be able to unilaterally schedule compressed work weeks.2 Under new section 23.1, similar arrangements can still be made. However, it must be done by negotiating hours of work averaging agreements with the employees (“Averaging Agreements”), which expressly set out the manner in which employees’ entitlement to overtime pay or time off with pay in lieu will be calculated.

Averaging Agreements must:

  1. be in writing;
  2. specify a start and end date, and their terms must not exceed 2 years;
  3. specify the number of weeks over which the hours will be averaged, to a maximum of 12 weeks;3
  4. specify the scheduled daily and weekly hours of work, which must not exceed:
    (a) 12 hours per day; and
    (b) 44 hours per week if the agreement specifies a one-week period, or an average of 44 hours per week if the agreement specifies a period of more than one week; and
  5. specify the manner in which overtime pay (or time off with pay in lieu) will be calculated.

Averaging Agreements may be entered into by one employee or a group of employees. If a new employee is hired into a group that had previously entered into an Averaging Agreement, the new employee will be bound by its terms.

The new Code section 23.1 allows cycles of 1 to 12 weeks as part of Averaging Agreements. Below are some examples of how such cycles can be structured.  In each of these examples the Averaging Agreement would need to address how overtime is to be calculated and paid in the event that additional hours were worked within the cycle.

 

1 week cycle: 4 days on, 3 days off:

Hours per day Days per work week Total Weekly hours
Week 1 10 4 40
Average Weekly Hours 40

 

 

3 week cycle: 2 weeks on, 1 week off:

Hours per day Days per work week Total Weekly hours
Week 1 12 5 60
Week 2 12 5 60
Week 3 off 0 0
Average Weekly Hours 40

 

 

7 week cycle: 4 on, 4 off:

Hours per day Days per work week Total Weekly hours
Week 1 11 4 44
Week 2 11 4 44
Week 3 11 4 44
Week 4 11 4 44
Week 5 11 4 44
Week 6 11 4 44
Week 7 11 4 44
Average Weekly Hours 44

 

 

Let’s get creative with some alternative averaging cycles:

11 days on 10 days off could look like this:

Hours per day Days per work week Total Weekly hours
Week 1 12 7 84
Week 2 12 4 48
Week 3 off 0 0
Average Weekly Hours 44

 

1 week cycle: 4 days on, 3 days off:

Hours per day Days per work week Total Weekly hours
Week 1 10 4 40
Average Weekly Hours 40

 

 

3 week cycle: 2 weeks on, 1 week off:

Hours per day Days per work week Total Weekly hours
Week 1 12 5 60
Week 2 12 5 60
Week 3 off 0 0
Average Weekly Hours 40

 

 

7 week cycle: 4 on, 4 off:

Hours per day Days per work week Total Weekly hours
Week 1 11 4 44
Week 2 11 4 44
Week 3 11 4 44
Week 4 11 4 44
Week 5 11 4 44
Week 6 11 4 44
Week 7 11 4 44
Average Weekly Hours 44

 

 

Let’s get creative with some alternative averaging cycles:

11 days on 10 days off could look like this:

Hours per day Days per work week Total Weekly hours
Week 1 12 7 84
Week 2 12 4 48
Week 3 off 0 0
Average Weekly Hours 44

 

Accountants and bookkeepers often work on a monthly cycle that requires more care to ensure the averaging rules are being met. For example, a monthly cycle with five 12 hour days for the first two weeks, and three 8 hour days for each week remaining in the month. Weeks that include both beginning and end of month days shall be worked as 8 hour days for the end of month days and 12 hour days for the beginning of month days, which would effectively be a 5 week cycle that results in the average weekly hours never exceeding 44.

Alternatively, a monthly cycle could use banked time, although this would result in increased time off, as banked time will be earned at 1.5 times. For example, a 60 hour work week with overtime banked, would result in 24 hours of banked time (16 hours at 1.5) to be used within the next six months. Note that an employer can require an employee to use the banked time within a set schedule in less time than 6 months. For example, the Averaging Agreement might include the requirement that banked time be used within one month as scheduled by the employer.

 


1 This information relates to the majority of overtime eligible employees where there is no collective agreement. Certain industries have special rules, as outlined in the regulation. If you are interested in how the new overtime rules apply to these industries, please contact us.

2 Existing compressed work week arrangements that are in place when the updated Code comes into force will remain valid for up to one year thereafter.

3 One can apply for a permit to enter into longer periods.




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