How to Calculate Overtime in BC

04 Sep How to Calculate Overtime in BC

To calculate Overtime in BC is a bit… complicated. Although it’s not that it’s anything you can’t handle, however there are several types of overtime, and one can affect the other. But not to worry! That’s why we’re here; to help you get the rules straight and make it as easy as possible. For the maximum simplicity however, consider signing up for a Free 30 Day Trial of Payroll Connected. For just $12 per month, our unique software can calculate all these overtime rules completely automatically, saving you valuable hours and headache. For now though, on to the old fashioned way!

In BC, there are four flavours of overtime. Yes, four.
1. 32 Hr Break Rule Overtime (regular wages x 1.5)
2. Double Overtime (regular wages x 2)
3. Daily Overtime (regular wages x 1.5)
4. Weekly Overtime (regular wages x 1.5)

Note that Salaried employees do not typically receive overtime pay.

Also NOTE: Rules 1 and 4 are dependent on a regular ‘Work Week’, which is a repeating 7 day period considered as a work week within the company. In other words, if the work week is considered to be Sunday to Saturday (a regular work week), then it cannot be shifted to be Monday to Sunday should it benefit the company for this one pay period. Of course a work week could be defined as Monday to Sunday so long as that’s the established work week, but the take away is that once it’s set and known, it shouldn’t be adjusted unless for a long term change and all employees be made aware of it.

To help illustrate these rules and how to calculate them as we go, let’s set up an example that we can follow through to the end. In this case we have a VERY hard working employee that works variable hours:

1. 32 Hour Break Rule Overtime

When calculating Overtime in BC, each employee is entitled to at least 32 hours free from work in an established 7 day work week. However if an employee does NOT receive 32 hours free from work within the work week, then one day must be paid at 100% Overtime rate (1.5x their regular rate). The good news is that the employer can select which shift to pay out at the overtime rate.

Looking at Johnny’s work week, the most beneficial shift to adjust in this way is the Tuesday shift of just one hour. Once adjusted, the schedule looks like this:

2. Double Overtime

Above regular overtime, there’s also Double Overtime, where any daily hours worked in excess of 12 should be paid at x2 the employee’s regular rate. From our example, Monday they worked 13.5 hours, and so 1.5 hours of that time should be converted to Double Overtime:

3. Daily Overtime

The most common type of overtime is Daily Overtime, where any daily hours worked in excess of 8 and less than 12 should be paid at the Overtime rate of 1.5 x their regular rate.

From our example, you can see that this 8 hour workday was exceeded on Monday, Wednesday and Saturday. All of those days will have the time worked over 8 hours converted to Overtime hours:

4. Weekly Overtime

The last thing to figure when calculating Overtime in BC is the ‘regular work week’, which per labour standards is set to 40 hours a week. After all other overtime types have been applied, add up all the Regular Wage hours remaining for the week. If the total is greater than 40 hours, then all hours over those 40 are to be converted to the Overtime rate of 1.5x their regular wage.

IMPORTANT NOTE: If the week contains a Statutory Holiday, and the employee qualifies for Statutory Holiday Pay, it does NOT affect the weekly overtime calculation, as the 40 hour total only considers hours ACTUALLY worked. So only add Stat Day hours to the 40 week total if they are actually working those hours on the Stat Day (also known as Stat Worked).

If you take a look at the ‘Remaining Hours’ row from the previous “3. Daily Overtime” step, the total is 47, which means that there is 7 hours that need to be converted to Overtime. So with that applied, the final hours look like this:

There you have it!

Not everyone’s payroll is as complicated as this example, though now at least you have everything you need to ensure their Overtime is being calculated correctly. Lastly I’ll mention that there’s also a variance called an Averaging Agreement, where you can average an employee’s total hours over a one to four week period, so long as you and the employee agree to the terms in writing.

Once the number of weeks to average the payroll across is agreed upon, then instead of calculating Daily Overtime or the 32 Hours Break rule, only the Weekly Overtime rule applies when calculating Overtime, based on the number of weeks averaged over x 40 hours per week. Double overtime does still apply however for any hours worked over 12 daily, so do be aware of that. If an employee is on a two week averaging agreement, for example, they would have to work in excess of: 2 wk x 40 hrs = 80 hrs per averaging period to qualify for any Overtime (excluding Double OT of course).

As mentioned at the start however, I would encourage you to give Payroll Connected a try and let it do all the hard and time consuming calculations for you. At least now you hopefully have a grasp on calculating Overtime in BC. For all the official rules straight from the BC Government site, you can find them all here:
https://www2.gov.bc.ca/gov/content/employment-business/employment-standards-advice/employment-standards/hours

Photo by Udayaditya Barua on Unsplash