Can overtime be “banked”?
A. An employee may receive 1.5 hours of paid time off work for each hour of overtime worked instead of overtime pay when an employee and employer agree to do so. The following conditions also apply: the time off shall be taken within three months of the date the overtime is earned unless the employer and employee agree to extend the time period; payment or time off must be finalized within 12 months of the date the overtime is earned. If the employment ends before the time off is taken, the employer shall pay the employee for all overtime hours worked within seven days of termination.
There are no provisions for banking of overtime in the Labour Standards Act. We do not have a problem with an employer and employee entering into a lieu time situation as long as its agreeable between the two parties and the time off is given at time and one half. That means, for an overtime hour worked, an employee is entitled to 1.5 hours off with pay at straight time. Time off cannot be given hour for hour. At any time, an employee can ask that their overtime be paid out and the employer must pay it out. If an employee has overtime banked and the employment ends, the overtime is payable on the final pay.
