How to Calculate Overtime Pay in Canada

December 9, 2025

Stephanie Gilman

For payroll and HR professionals, few topics spark as many questions as overtime pay in Canada. Whether it’s figuring out when overtime starts, how to calculate it correctly or which employees are exempt, staying compliant with overtime laws in Canada can be tricky.

Yet it’s worth getting right. Statistics Canada data shows that about 10 per cent of Canadian employees work paid overtime each week – and even small payroll errors can add up to costly compliance issues. Understanding how overtime pay works helps protect both your organization and your employees.

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Overtime pay basics: the rules in Canada

Overtime pay refers to extra compensation for hours worked beyond the standard workweek set by each province or territory. Across most of Canada, the threshold is between 40 and 44 hours per week, except in Nova Scotia and Prince Edward Island where the threshold is 48 hours per week.

Overtime pay rates are typically time-and-a-half pay – or 1.5 times the employee’s regular hourly wage. When employees work on statutory holidays, they’re entitled to their regular wages plus time-and-a-half for the hours worked, depending on provincial overtime rules in Canada.

Overtime pay works slightly differently in British Columbia where employees receive time-and-a-half for working between eight and 12 hours in a day, and double-time pay for each hour worked beyond 12 hours.

There are also overtime exemptions in Canada, including some managerial and professional roles. The exemptions and thresholds vary by province, so payroll teams should always review the overtime pay rules by province to stay compliant and prevent disputes over employee overtime rights.

How to calculate overtime pay in Canada

The basic hourly wage calculation for overtime starts with an employee’s regular hourly rate. For example, if an Ontario employee earns $25 per hour and works 50 hours in one week, the overtime calculation would be:

44 regular hours × $25 = $1,100
6 overtime hours × ($25 × 1.5) = $225
Total weekly pay = $1,325

When calculating overtime for salaried employees in Canada, first determine their equivalent hourly rate. Divide the employee’s weekly salary by the number of work hours in a week to calculate the base hourly rate, then apply the appropriate overtime multiplier.

For example: A salaried employee earning $1,320 weekly ($30/hour equivalent for a 44-hour workweek) who works 50 hours in one week would earn 6 overtime hours × $45 = $270 in overtime pay.

Using an overtime pay calculator can help double-check accuracy and ensure consistent payroll overtime calculation practices. Just remember that the regular rate for overtime must include all eligible earnings – such as shift premiums, commissions and non-discretionary bonuses—under Canadian overtime laws.

Common mistakes in overtime pay calculations

Missteps in calculating overtime pay rates are often simple but costly. Here are some common mistakes.

Incorrectly classifying employees as exempt when they’re not;
Failing to include all types of regular pay such as bonuses or commissions;
Overlooking overtime for part-time or remote employees;
Not tracking daily hours in provinces with daily overtime rules; and
Replacing overtime pay with time off without a written agreement.

Accurate tracking, proactive reviews and strong communication between HR, payroll and management go a long way in preventing compliance issues and building employee trust.

The impact of overtime pay on payroll budgeting

Overtime doesn’t just affect individual paycheques, it can have a major impact on payroll budgets and overall labour costs. For HR and accounting teams, tracking and forecasting overtime trends can reveal where workloads, staffing levels or scheduling policies might need adjustment.

Regular overtime may signal that teams are understaffed or that seasonal demand isn’t being managed efficiently. On the other hand, occasional overtime can be a useful tool for flexibility when handled transparently and within budget.

Building overtime forecasting into your payroll planning helps organizations stay proactive, not reactive. It also supports conversations between HR, finance and leadership about workload management, employee well-being and long-term staffing strategies.

Overtime pay compliance for Canadian employers

For payroll professionals, overtime pay compliance in Canada goes far beyond crunching numbers. It’s about protecting the organization from costly penalties while ensuring employees are paid fairly for their time. When HR and payroll teams stay on top of overtime pay rules in Canada – through accurate tracking, regular reviews and clear communication – they build both trust and transparency. Consistent compliance strengthens confidence across the organization and helps create a culture where accuracy, fairness and accountability guide every pay cycle.

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