Averaging of hours of work - IPG-053

This Interpretation, Policy and Guideline (IPG) applies to all federally regulated employers. The objective of the IPG is to:

• set out the application of provisions related to averaging of hours of work contained in subsection 169(2) of Part III of the Canada Labour Code (Code) and section 6 of the Canada Labour Standards Regulations (Regulations)
• explain the Labour Program’s approach to employers adopting averaging plans

Issue

A program approach in adopting averaging plans is needed to ensure consistent interpretation and application. This IPG addresses the following:

• what is averaging
• the criteria that allows averaging plans
• situations when averaging plans can be adopted

Interpretation

Averaging is set out in subsection 169(2) of the Code, which states:

“Where the nature of the work in an industrial establishment necessitates irregular distribution of the hours of work of an employee, the hours of work in a day and the hours of work in a week may be calculated, in such manner and in such circumstances as may be prescribed by the regulations, as an average for a period of 2 or more weeks.”

Adoption of an averaging plan

Employers may adopt, alter or cease averaging. To adopt or alter a plan, a notice of intention must be posted at least 30 days before the effective date. A copy of the notice must be sent to the Head of Compliance and Enforcement (Head) and to every trade union representing affected employees who are subject to a collective agreement. The notice to the Head can be sent by email at NA-ERO-GD@labour-travail.gc.ca or by mail to the closest Labour Program office.

Averaging plans may be adopted for a class of employees that includes different types of work arrangements (full-time, permanent, part-time, casual or seasonal).

Criteria and conditions:

• employees without scheduled hours
• employees with regularly scheduled hours, but the number of hours differs
• the averaging period is 2 consecutive weeks or more
• maximum term of 3 years or the term of a written agreement between a trade union and an employer
• applies only to employees whose standard hours are 8 hours per day and 40 hours per week. This would exclude city drivers and line-haul drivers of motor vehicles

Note: “employees” also includes “interns”. Student interns are not entitled to averaging of hours of work provisions.

Operational necessity

Averaging plans may be adopted when external factors prevent the employer from establishing a regular schedule.

Examples of external factors include:

• tour bus operators working long hours during peak seasons
• non-driving employees of moving companies whose hours of work fluctuate depending on the nature and distance of moves
• pilots and mechanics of small air operators with irregular hours of work, usually due to climatic conditions
• telecommunications employees with hours that vary depending on the availability of equipment, production facilities, technicians and interviewees, as well as weather when shooting outside events
• employees at seed cleaning operations who must process grain seeds quickly to prevent waste, and
• employees who must travel to remote locations to work

Important: Averaging should not be used to address emergencies. This can be addressed using the urgent work provisions under subsection 177(1) of the Code.

Workers without scheduled hours

Employees without scheduled hours may:

• be casual or on-call workers who are not guaranteed to have work every day
• need to report to their employer to check their schedule for the day. This is common in the moving industry

Workers with regularly scheduled hours

Averaging can only be applied if the scheduled hours of work (not the number of hours actually worked) vary from day to day and week to week.

Standard and maximum hours of work

• standard hours of work are 40 X the number of weeks for averaging
• maximum hours of work are 48 X the number of weeks for averaging

Payment of overtime

Overtime must be calculated and paid at the end of each period as follows:

• determine the standard and maximum hours of work
• apply the reductions set out in the regulations:
  • reduction of 8 hours/40 hours for:
    • one day of annual leave with pay/a week of annual leave with pay
    • one general or other holiday with pay
    • one day/a week of leave of absence with pay while the employer examines the request of reassignment or functions modification of the pregnant or nursing employee (subsection 205(2) of the Code)
    • one personal day with pay
    • one day of leave with pay for victims of domestic violence/a week of leave with pay for victims of domestic violence
    • one day of bereavement leave with pay
    • one day/a week of medical leave of absence with pay
    • one day/a week that is normally a working day in respect of which the employee is not entitled to regular wages
    • 7 consecutive days without pay

    Employee begins after the start of an averaging period

    When an employee is hired after an averaging period has begun, reductions of 8 hours per day and 40 hours per week must be applied for the period between the beginning of the averaging period and the beginning of employment.

    For example, for an employee who begins working at the beginning of the 11th week of a 16-week averaging period, the standard and maximum hours of work for that employee are reduced by 400 hours (10 × 40) for that period.

    Employment is terminated during an averaging period

    • employer’s decision: the employee is paid at the overtime rate for all hours worked in excess of 40 times the number of full weeks worked in the period prior to the termination of employment by the employer, less applicable reductions
    • employee’s decision: the employee is paid only at the regular rate for the part of the period prior to the termination of employment (averaging is cancelled)

    Alteration in number of weeks or cessation of averaging before the end of the period

    An employer who alters the number of weeks or ceases an averaging plan before the end of a period must post a notice to that effect and forward a copy of the notice to the Head and the union, if applicable, at least 30 days before taking such action.

    The employer must pay employees at the overtime rate for all hours worked in excess of 40 times the number of full weeks in the altered period, less any applicable reductions.

    Examples

    Here are some examples requiring reductions to the standard hours of work:

    Scheduled hours which vary with a regular weekly, monthly or annual base salary (for example, $4,000 per month)

    Camilo is an airline pilot. She has a monthly base salary and scheduled hours which vary. Her base salary is considered regular wages. She is subject to a 2-week averaging plan. During her 2-week period, there was a holiday and a day on which airplanes were grounded due to bad weather. In addition, Camilo took 1 day of bereavement leave with pay. The total hours worked during these 2 weeks was 70 hours.

    Schedule example	Standard hours	Maximum hours
    Hours	80 (40 x 2)	96 (48 x 2)
    Reductions	- 8 hours for the holiday - 8 hours for the bereavement leave	- 8 hours for the holiday - 8 hours for the bereavement leave
    New hours	64	80
    Hours worked	70	70

    Overtime hours to be paid at the higher rate: 6 hours

    Since Camilo has a monthly base salary, her hours are not reduced for the day planes were grounded.

    Scheduled hours which vary without a regular weekly, monthly or annual base salary

    Elian is an employee of ABC Transportation Group and has scheduled hours that vary. He is paid by the hour for the hours actually worked. He is subject to a 2-week averaging plan. During his 2-week period, there was a holiday and a day on which there was no work. In addition, Elian took 1 day of bereavement leave with pay and 1 day of medical leave with pay. The total hours worked during these 2 weeks was 60 hours.

    Schedule example	Standard hours	Maximum hours
    Hours	80 (40 x 2)	96 (48 x 2)
    Reductions	- 8 hours for the holiday - 8 hours for the bereavement leave - 8 hours for the day of medical leave with pay - 8 hours for the normal working day not worked	- 8 hours for the holiday - 8 hours for the bereavement leave - 8 hours for the day of medical leave with pay - 8 hours for the normal working day not worked
    New hours	48	64
    Hours worked	60	60

    Overtime hours to be paid at the higher rate: 12 hours

    Elian’s hours are reduced by 8 hours for the day on which there was no work, since that day was a normal working day on which he was not entitled to regular wages.

    Non-scheduled hours

    Pablo is an employee of the ABC Transportation Group and has no scheduled hours. He calls his employer every morning to check if there is work for him and goes to work if there is. He is subject to a 2-week averaging plan. During his 2-week period, there was a holiday and a day on which there was no work. In addition, Pablo took 1 day of bereavement leave with pay. The total hours worked during these 2 weeks was 70 hours.

    Schedule example	Standard hours	Maximum hours
    Hours	80 (40 x 2)	96 (48 x 2)
    Reductions	- 8 hours for the holiday - 8 hours for the bereavement leave	- 8 hours for the holiday - 8 hours for the bereavement leave
    New hours	64	80
    Hours worked	70	70

    Overtime hours to be paid at the higher rate: 6 hours

    Pablo’s hours are not reduced by 8 hours for the day on which there was no work because Pablo has no scheduled hours, so no day is normally a working day for him.

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