Additional Changes to Ontario Employment Standards – Hours of Work and Overtime Averaging

The Ontario government introduced omnibus legislation on December 6, 2018, that, when passed, will amend multiple statutes which the Minister of Economic Development, Job Creation and Trade stated were designed to “reduce red tape and regulatory burden” as part of the Provincial government’s Open for Business Action Plan.

Included in the latest round of proposed changes under the Restoring Ontario's Competitiveness Act, 2018, are several key changes to the Employment Standards Act, 2000 (the “ESA”), focused on hours of work flexibility.

The proposed changes include the elimination of the current requirement for Ontario businesses, seeking to have their employees work excess hours or engage in overtime averaging, to obtain both the written agreement from the affected employees (or union) and approval from the Director of Employment Standards.

If/when passed, Ontario employers will now only need a written agreement with their employees (or union if represented) to implement excess hours of work and overtime averaging at their workplaces. The proposed legislation does not limit the number of excess hours that can be agreed upon in the work week. However, other hours of work limitations and rest requirements already part of the ESA would not be changed. Additionally, employers will still have to be mindful of safety considerations to “uncapped” work hours.

Also significant is the proposed change to overtime averaging. Since the beginning of 2018, the Ministry of Labour and the Office for the Director of Employment Standards had been taking a much stricter review of applications for overtime averaging. The proposed change would now eliminate the requirement for employers to apply for Ministry of Labour approval of these “permits.” Notably, in exchange for the streamlined approach, the period over which hours of work could be averaged would now be limited to a maximum four week period (as opposed to whatever longer period the Ministry/Director would have approved).

Any existing approved overtime averaging agreements would continue in force until their expiry.

The latest legislation is a further indication of the government’s stated commitment to reducing “red tape” and regulation applicable to Ontario’s businesses.

Businesses who have recently applied for overtime averaging or excess hours and have been denied a permit should review and obtain written agreements with their employees to “re-try” implementing the policies unilaterally when the legislation is proclaimed in force. However, businesses should understand that employees (and unions) are not obligated to agree to either excess hours or overtime averaging arrangements, and morale (as well as monitoring safe operations) should be considered when introducing these changes.