There are only four allowable circumstances in which an employer and employee may enter into an agreement to vary from the Ontario Employment Standards Act (ESA) standards. All agreements should:
- Name the parties
- Specify the term of the agreement
- Specify the standard being varied
- Be signed
- Pertain only to future events
An employee’s consent must also be informed and voluntary. For greater clarity, an informed party understands the consequences of consent (i.e. party is aware of important or exceptional terms) and a party that has voluntarily consented has done so freely and without any form of coercion from the employer.
i. Agreement to Exceed Daily and Weekly Maximum Hours of Work
To vary maximum daily hours, you need only meet the first two standards below. To vary maximum weekly hours, you must meet all three standards below:
1. Provide non-union employees with the most recent version of a Ministry information bulletin entitled “Information for Employees About Hours of Work and Overtime Pay.”
2. Get the employee (or union’s) consent to the written agreement.
3. Receive approval from the Director of Employment Standards via online application.
Non-union employees may revoke the agreement with two weeks’ notice. Employers must provide “reasonable” notice which may vary depending on several factors. For example, if an agreement has been in effect for several years, reasonable notice will likely exceed two weeks.
ii. Agreement to Average Hours of Work for Overtime Pay Purposes
Where an employee’s hours of work vary greatly week to week, the parties may agree to average the hours worked over an agreed upon period of weeks by meeting the standards below:
1. Get the employee’s consent to the written agreement.
2. Receive approval from the Director of Employment Standards via online application.
If the conditions are met, overtime is payable upon exceeding an average of 44 hours (or whatever the overtime threshold is for the industry/job). Such agreements may be valued by employees who desire flexible hours and employers seeking to lower the cost of overtime pay.
iii. Agreement to Compensate Overtime Hours with Time Off in Lieu of Pay
An employer and employee may agree that the employee must take 1.5 hours of paid time off (at their regular wage rate) for each hour of overtime worked in lieu of overtime pay. While this does not reduce the overall amount you must pay the employee, it may be useful where the demand for labour varies greatly week to week. Directorial approval is not necessary.
iv. Agreement to Take Vacation Time in Increments of Less Than One Week
An employer and employee may agree to allow for vacations to be taken in increments of less than one week at a time. Directorial approval is not necessary.
- Before deviating from the Ontario Employment Standards Act, follow the outlined procedures!
Author: Sahil Kanaya