September 12, 2018
Starting January 1, 2019, non-unionized employers in Alberta will no longer be allowed to have employer-imposed compressed work week schedules. Unionized employers too will soon face this change, if they have not already. Instead, the recent changes to the Alberta Employment Standards Code allow for employers to enter into averaging agreements with their employees. This article highlights the need for non‑unionized Alberta employers that still have compressed work week schedules to do away with them before the new year and consider whether averaging agreements may be right for their workplaces.
The compressed work week (CWW) has been used by many Alberta employers to reduce overtime liability where longer work days are required for business operations. Under a CWW, employees could work fewer work days in the work week but more than eight hours per day without working overtime. CWWs also allowed employers to average hours of work over multiple weeks so that weekly overtime would not accrue unless the weekly average was higher than 44 hours. Employers needed to follow certain rules for their CWWs to be valid.
Under the recent changes to the Employment Standards Code (the “Code”), CWW arrangements entered into before January 1, 2018 remain valid until January 1, 2019 for non-unionized workplaces. For a unionized workplace with a CWW as part of its collective agreement, the CWW remains valid until the parties enter into their next collective agreement after January 1, 2018. Workplaces are also free to end their CWWs earlier, subject to the terms of any collective agreement which may be in place.
With CWWs soon to be a thing of the past, many employers will look to averaging agreements to replace them. The major difference from CWWs is that averaging agreements, as the name suggests, require employee agreement. CWWs, on the other hand, could be imposed by the employer without employee agreement.
There are two types of averaging agreements: the hours of work averaging agreement (HWAA) and the flexible averaging agreement (FAA). They allow employers to schedule an employee to work longer hours per day paid at the employee’s regular wage rate. The employer will average an employee’s hours of work over a set period to determine overtime hours (from 1-12 weeks for HWAAs and 1-2 weeks for FAAs). The Director of Employment Standards can extend the averaging period for an HWAA beyond the 12-week maximum but no extension is allowed for an FAA beyond the 2-week maximum. Both kinds of arrangement require a written agreement containing specific terms. An HWAA can be with an individual or a group of employees, with majority consent binding all members of the group, including new members. An FAA may be with an individual only.
Another major difference between the two types of averaging agreement is the concept of “flexible time” under a FAA. Essentially, it is a way of giving an employee time off with pay at the employee’s regular wage rate for some of the extra time worked on longer days. Flexible time is earned when employees work more than their scheduled daily hours, but not more than the agreed‑upon daily overtime threshold (which cannot be higher than 10 hours in a day). The time off with regular pay must be taken before the end of the next averaging period. If not, the employer must pay the employee their regular wage rate for the flexible hours not taken off.
Takeaways for Employers
Saying goodbye to CWWs is a major change for many employers. Some of them may be able to replace their CWWs with averaging agreements to continue reducing overtime liability. Non‑unionized employers interested in doing so would be wise to begin the process of implementing these agreements in the coming weeks, well in advance of the January 1st deadline, as this will require employee agreement. Leaving sufficient time for proper messaging and communicating with employees around the issue is also crucial.
Employers with questions or concerns about the effect of this decision on their current practices are encouraged to contact a Mathews Dinsdale lawyer .