Overtime Averaging: No Notice, No Harm, No Foul

By Stringer LLP

November 9, 2017

In a recent decision, the Divisional Court refused to grant damages to a terminated employee for an employer’s failure comply with legislative requirements regarding overtime averaging.

Overtime is normally calculated on a weekly basis. Overtime averaging allows employers to average hours of work over two or more weeks for purposes of calculating entitlement to overtime pay.

Employment standards legislation also prescribes the maximum number of hours employees may work in a given period. Excess hours agreements allow employees to work more than the prescribed number of hours per day and per week in some circumstances.

The Case

The employee in Rego v. Northern Air Solutions Inc. was a pilot under contract to work seven days “on” and seven days “off” flying medevac flights. His employment was federally regulated under the Canada Labour Code (the “Code”).

The employer scheduled the employee to fly during his seven days on; he was not required to be available for work on his off days. Subsequently, the employer scheduled him for pilot training on his “off” time. The employee was eventually terminated with cause, and made a claim for wrongful dismissal. Among other things, he claimed that the employer owed him compensation for the overtime he performed during the training on his off time.

The Decision

The Divisional Court upheld the motion judge’s ruling that the employee was not entitled to overtime pay. The Court found that the employer and employee had agreed to overtime averaging in the contract of employment.

In considering the evidence, the Court found that the contract was for seven days on, followed by seven days off. The nature of employment, flying medevac flights, called for irregular hours. It would have been unreasonable for the employee to suppose that he was only required to work half time for his salary, and that time beyond forty hours on this weeks “on” would be paid in addition to the following week “off”. The Court also considered the fact that the employee never made inquiries about overtime pay until after he was terminated.

The Court found that, although the employer had not complied with the Code’s requirements for overtime averaging, the employee did not experience any prejudice due to this failure. In particular, the employer did not post a notice in the workplace, nor did it send the employees a formal notice about averaging of hours, and it did not put the Director on notice of its practice of averaging hours. However, the Court found that the employee was already aware of the overtime averaging, and suffered no damage as a result of the employer’s failure to re-notify him about something he already knew.

The Takeaway

The Court found that no damage resulted to the employee in this case from the employer’s failure to post notices and notify the Director of its averaging practice; however, it is important to note that employers can be prosecuted for failing to comply with legislative requirements under the Code, if they are federally regulated (and under provincial legislation, if they are provincially regulated).  Moreover, courts routinely strike down provisions in employment contracts that run afoul of technical, employment standards legislation.  Arguably, including a technically unlawful provision in respect of overtime averaging (or any other topic covered in employment-related legislation) may jeopardize the enforceability of the employment contract more broadly.