This section allows an employer and an employee to enter into a written agreement to average hours of work over a one to four week period. The eligibility and related calculations for overtime and rest periods are included in this section.
37. (1) Despite sections 35, 36 (1) and 40 but subject to this section, an employer and employee may agree to average the employee's hours of work over a period of 1, 2, 3 or 4 weeks for the purpose of determining the employee's entitlement, if any, to overtime wages under subsections (4) and (6) of this section and wages payable under subsection (8) or (9) (b).
(2) An averaging agreement under subsection (1) is not valid unless
(a) the agreement
(i) is in writing,
(ii) is signed by the employer and employee before the start date provided in the agreement,
(iii) specifies the number of weeks over which the agreement applies,
(iv) specifies the work schedule for each day covered by the agreement,
(v) specifies the number of times, if any, that the agreement may be repeated, and
(vi) provides for a start date and an expiry date for the period specified under subparagraph (iii),
(b) the schedule in the agreement under paragraph (a) (iv) is in compliance with subsection (3), and
(c) the employee receives a copy of the agreement before the date on which the period specified in the agreement begins.
(3) A work schedule in an agreement under this section must not provide for more than the following hours of work for the employee:
(a) 40 hours, if the agreement specifies a 1 week period under subsection (2) (a) (iii);
(b) an average of 40 hours per week, if the agreement specifies more than a 1 week period under subsection (2) (a) (iii).
(4) An employer under this section who requires, or directly or indirectly allows, an employee to work more than 12 hours a day, at any time during the period specified in the agreement, must pay the employee double the employee's regular wage for the time over 12 hours.
(5) An employer under this section who requires, or directly or indirectly allows, an employee to work more than an average of 40 hours a week within the period specified in the agreement must pay the employee 1 1/2 times the employee's regular wage for the time over 40 hours.
(6) An employer under this section who requires, or directly or indirectly allows, an employee to work more than the hours scheduled for a day during the period of the agreement must pay the employee
(a) 1 1/2 times the employee's regular wage for,
(i) if fewer than 8 hours were scheduled for that day, any time worked over 8 hours, or
(ii) if 8 or more hours were scheduled for that day, any time worked over the number of hours scheduled, and
(b) double the employee's regular wage for any time worked over 12 hours that day.
(7) For the purpose of calculating average weekly hours for an employee under subsection (5),
(a) only the first 12 hours worked by the employee in each day are counted, no matter how long the employee works on any day of the week, and
(b) if subsection (6) applies, the time that the employee works beyond the scheduled hours and for which the employee is paid in accordance with that subsection, is excluded
(8) Section 36 (1) applies in relation to an averaging agreement if the period specified in the agreement is 1 week.
(9) If the period specified in an averaging agreement is more than 1 week, the employer must either
(a) ensure that for each week covered by the agreement, the employee has an interval free from work of 32 consecutive hours, whether the interval is taken in the same week, different weeks or consecutively any time during the weeks covered by the agreement, or
(b) pay the employee 1 1/2 times the regular wage for time worked by the employee during the periods the employee would otherwise be entitled to have free from work under paragraph (a).
(10) At the employee's written request, the employer and employee may agree to adjust the work schedule referred to in subsection (2) (a) (iv) provided that the total number of hours scheduled in the agreement remain the same.
(11) The parties to an averaging agreement under this section are bound by that agreement until the expiry date set out in the agreement or a later date provided in an agreement to repeat the averaging agreement, as the case may be, and the provisions of the averaging agreement apply for the purpose of determining the employee's entitlement, if any, to overtime wages under subsections (4) and (6) and wages payable under subsection (8) or (9) (b).
(12) Subsections (2) to (11) are deemed to be incorporated in an averaging agreement under this section as terms of the agreement.
(13) An employer must retain an averaging agreement under this section for 4 years after the following, as applicable:
(a) the expiry date set out in the averaging agreement, unless paragraph (b) applies;
(b) the expiry date set out in one or more agreements to repeat the averaging agreement, whichever date is the latest.
(14) The application and operation of an averaging agreement under this section must not be interpreted as a waiver described in section 4.
Subsection (1)
An agreement to average hours of work under this section allows an employer and an employee to agree to a work schedule of up to 40 hours in a one-week work schedule or an average of up to 40 hours in a 2 to 4 week work schedule without weekly overtime. A daily work schedule in an averaging agreement results in daily overtime when scheduled hours worked exceed 12.
Examples:
Note:
Overtime wages earned when working under a s.37 averaging agreement can be banked pursuant to s.42 of the Act.
Under s.37.8 of the Employment Standards Regulation an employee working for a high technology company who is not a high technology professional, may enter into an agreement that results in the modification of the provisions of s.37.
There is no requirement to notify the Employment Standards Branch when the parties enter into an averaging agreement. Also, the Branch does not supply examples of averaging agreements nor does Branch staff have authority under this section to approve an averaging agreement.
An employer and employee may enter into an averaging agreement unless the Employment Standards Regulation excludes the parties from s.37 of the Act.
Example:
A “manager is excluded from Part 4 of the Act pursuant to Employment Standards Regulation s.32(1). A “manager” and their employer cannot enter into a s.37 averaging agreement since managers are excluded from Part 4 of the Act in its entirety.
When an employee is excluded by Regulation from s.40 of the Act, and the Regulation specifies overtime requirements to replace those in s.40, an employer and employee may still choose to enter into a s.37 averaging agreement. In this case, s,37 of the Act takes precedence over the overtime requirements in the Employment Standards Regulation.
Example:
A “short haul truck driver”, as defined in s.1 of the Employment Standards Regulation, is excluded from ss.35, 40, and 42(2) of Part 4 of the Act. Section 37.3(3) of the Employment Standards Regulation requires the payment of overtime after specified hours of work.
The “short haul truck driver” may enter into an averaging agreement since the Regulation does not exclude them from s.37 of the Act. If the parties enter into an averaging agreement, the provisions of s.37 of the Act determine overtime calculations and eligibility. In this case the s.37 agreement acts to exclude the driver from the overtime provisions in the Regulation.
Subsection (2)
This subsection sets agreement conditions. Unless an agreement meets all of the conditions noted in s.37(2), the Director will find that the averaging agreement is not valid and s. 40 of the Act will apply to determine overtime entitlement and pay (See Example below) and s.36(1) of the Act will also apply to determine premium pay owing for work performed during a 32 hour rest period.
37(2)(a):
i. The agreement must be in writing. Verbal agreements are not valid (see Example 1 below).
ii. The agreement is an individual agreement between an employer and an employee and once signed does not apply to any time worked prior to the signing of the agreement.
iii. The agreement must specify a 1 to 4 week period. The agreement must not exceed 4 weeks, unless varied by the Director. (See section 72(h.1) of the Act).
iv. The agreement must contain a daily schedule of hours and cannot exceed a total of 40 hours in a 1-week period or an average of 40 hours in a 2 to 4 week period. (See 37(3) and example 2 below). If an agreement contains more than 12 scheduled hours in a day, all time worked over 12 is payable at double-time the employee’s regular wage. (See section 37(4)).
Although this subsection restricts the total hours that can be scheduled in an agreement, the number of days per week and daily hours scheduled is not restricted by this section. (See example 3 below)
v. If the agreement is to repeat in a 1 to 4 week scheduling period, the number of times to repeat or the date of the last day of the last week to be repeated must be stated in the agreement.
vi. The expiry date can be for any period of time however the expiry date must be specified in the agreement.
37(2) (b):
The daily work schedule in an averaging agreement must not provide for more than 40 hours in a one-week schedule, or an average of 40 hours in a 2 to 4 week schedule, as noted in s.37(3).
37(2) (c):
The employee must receive a copy of the agreement before the work schedule in the averaging period begins.
Example:
1. An employer enters into a verbal agreement with an employee to work three 12- hour days per week. Since the agreement is not in writing as per s.7(2)(a)(i) all the conditions of s.37(2) have not been met and therefore the agreement is not valid and s.40 applies to the calculation of overtime.
2. The employer and employee enter into a two-week averaging agreement with a work schedule totalling 90 hours. The agreement is not valid since the average hours of work exceed 40 per week. Therefore s.40 of the Act would apply to the calculation of overtime.
3. An averaging agreement specifies a schedule of 12 daily hours and one day a week. If all other agreement conditions are met in s.37(2) this would be a valid agreement.
Subsection 37(3):
A work schedule under this section must not provide more than:
Subsection 37(4):
Example:
Subsection 37(5):
Example: One week schedule