Flexible shift work schedules are a familiar part of large-scale infrastructure and resource projects in British Columbia. In those industries, it is common for employees to work for several weeks, followed by a week off, work 10 or 12 hour shifts, or work some other nonstandard schedule. However, as more employers look for ways to lower payroll costs and improve flexibility, demand for flexible shift scheduling is increasing across many industries, a trend which is gaining momentum and will continue for the foreseeable future.
The reasons motiving non-standard work schedules are myriad, but often include time and cost pressures on employers. For example, market pressures may demand that a project is complete before price changes make the project uneconomic. Employers often compete for skilled employees from out of province, who may prefer the compensation benefits offered by many consecutive days of work, and longer breaks to return home. Finally, capital-intensive equipment can be better utilized when projects are completed quickly, allowing employers to be more efficient.
Providing the right kind of labour and employment scheduling requires good planning - in the non-union context, those arrangement are often in tension with many provisions of the Employment Standards Act, including provisions setting out maximum hours of work per week, overtime provisions, minimum amount of time free from work per week, and other rules that provide limits to shift scheduling. However, there are several tools within the Act that can provide significant flexibility - variances, averaging agreements, and exclusions - and are available to all employers in British Columbia.
Employment standards legislation was introduced into most commonwealth jurisdictions - including British Columbia - following the Second World War. Philosophically, the Employment Standards Act is legislation designed to protect workers from exploitation and to provide for working conditions that are “decent”. With regards to scheduling and hours of work, the purpose of the Act was to ensure that no worker should be
required “… to work so many hours that he or she is effectively denied a personal or civic life.”1
The Act provides the minimum terms for all contracts of employment for workers under provincial jurisdiction (similar legislation exists for federally regulated industries). Employers and employees are free to negotiate contracts that exceed the protections of the Act, and most do - wages, for example, commonly exceed the minimum standards set in the Act.
Part 4 of the Act governs scheduling hours of work and overtime. Section 35 of the Act provides that a standard work day is 8 hours, a standard work week is 40 hours, and if an employee works in excess of those hours, that employee will earn overtime, in accordance with the provisions of s. 40 of the Act - namely, 1.5 times an employee’s regular wage for hours worked in a day in excess of 8 hours and twice an employee’s regular wage for each hour after 12. Employees also earn 1.5 times their regular wage for any hours worked in excess of 40 hours a week.
The Act requires that employees have 8 hours free from work between shifts, and 32 consecutive hours free from work each week. Section 39 of the Act prohibits employers from either requiring or allowing employees to work “excessive hours”. The Act is silent on what constitutes “excessive hours”.
- Canada, Commission on the Review of Federal Labour Standards, Fairness at Work: Federal Labour Standards for the 21st Century by H.
W. Arthurs (Ottawa: Commission on the Review of Federal Labour Standards, 2006) at 47.
That Act is designed with the nine to five, 40 hour work week as the archetype for what it means to have “decent” working hours. Increasingly that arrangement runs into conflict with both employers and employees demanding more scheduling flexibility.
Averaging agreements allow employers to average hours so that over a set period, the average hours worked do not exceed 40 per week. An employee can agree to average the number of hours worked over a fixed period of up to four weeks.
Requirements for averaging agreements are set out in detail in s. 37 of the Act, and are summarized below:
- Each averaging agreement applies only to a single employee;
- If the employee and employer agree, averaging agreements allow for employees to work up to 12 hour shifts without the employer having to pay overtime, provided that on average, the total number of hours worked in a week does not exceed 40;
- Hours can be averaged over a period of one, two, three or four weeks;
- Employees must still have a minimum rest period between shifts of 8 hours and 32 consecutive hours free from work;
- The 32 hours free from work are calculated over the period of the averaging agreement. An averaging agreement over four weeks may have one 32 hour period free from work each week, all four 32 hour periods consecutively in the four weeks, or some combination thereof;
- Overtime applies for daily time worked in excess of the averaging agreement, weekly time worked beyond 40 hours, or failure to provide 32 hours free form work. Double time applies for daily hours beyond 12; and,
- Employees working pursuant to averaging agreements remain eligible for statutory holiday benefits.
How to Obtain an Averaging Agreement
The Act requires that averaging agreements be in writing. That is not only a requirement but is also good practice - in the event of a challenge to the validity of an averaging agreement, for example in the case where an employee claims he is owed overtime wages. The written agreement must include the number of weeks over which overtime will be averaged, the number of times the agreement may be repeated, and the start and end date for the averaging agreement. The request must be signed by both the employer and the employee.
The affected employee must receive a copy of the signed averaging agreement before the period specified in the agreement begins, and employers must keep their copy of the agreement for at least two years. Averaging agreements cannot be retroactive.
As with any other contractual agreement, employers should ensure that employees enter into averaging agreements fully informed of their legal rights and responsibilities, and satisfied with the arrangement, in order to prevent future claims that such an agreement was signed under duress or coercion.
Advantages and Disadvantages of Averaging Agreements
Averaging agreements are useful where a particular employee agrees to work several longer shifts in exchange for more time off at some point during the course of the agreement, and on average, the employee never works more than 40 hours weekly. They are also useful because they do not require approval from the Director of the Employment Standards Branch, and can be made between employer and employee alone. As a result they are faster to obtain than variances.
Averaging agreements are less useful where many employees will be subject to the working schedule, or where there is a planned build-up of employees over time, because each employee must have their own agreement. Averaging agreements also only apply to daily overtime, so if there are other provisions of the Act which are preventing a desired shift schedule, then a variance will be required.
Variances allow employers to seek arrangements outside the traditional structure of the Employment Standards Act for a large number of employees. Variances provide for a wholesale reprieve from the particular requirements of the Act, at the discretion of the Director of the Employment Standards Branch. In our experience, the Branch is pro-business with respect to variance applications, especially where a large number of jobs are at stake.
Variances are governed by s. 72 of the Act, and can apply to more than just overtime. Variances are available to modify the statutory requirements relating to:
- Maximum daily and weekly hours of work and overtime;
- Weekly and daily hours free from work;
- Minimum daily hours of work;
- Timing of pay days;
- Special clothing;
- Split shifts;
- Notice and pay provisions for group terminations under the act; and,
- The number of weeks in an averaging agreement.
The policy rationale underlying variances is that in many circumstances, “decent” working hours can be achieved outside the archetypical 40 hour work week. Because a broader range of flexibility is provided, that flexibility is more closely monitored by the Director of the Employment Standards Branch.
How to Obtain a Variance
The mechanics for applying for a variance are set out in s. 30 of the Employment Standards Regulation. To apply for a variance, an employer must make a request in writing to the Director of the Employment Standards Branch. That letter must:
- Describe the details of the variance requested;
- Be signed by a majority of employees that will be affected by the variance, indicating their approval of the proposed variance; and,
- List the name and home phone number of each employee who signs the variance.
A variance must be consistent with the intent of the Act. In each case, the Director must determine whether the variance will provide a benefit to the affected employees consistent with the purposes of the Act. Further, the Director must also take into account potential for a variance to affect all employees in the Province. It’s possible to involve the Branch on a voluntary basis at an early planning stage, and it’s often a good idea to do so.
In Hermit Holdings Ltd., BCEST #D380/98, the employer applied to vary the requirement that all employees be paid for at least 4 hours of work. The employer sought to vary the minimum number of hours to 2 in all circumstances, which the employer said was necessary in order to be able to hire additional employees. The Director refused the variance, finding that it was not consistent with the purposes of the Act:
Variances to the Minimum Daily Guarantee, like all variances, must be consistent with the intent of the Employment Standards Act.... The intent of the Act is to establish a set of minimum legal standards of compensation and conditions of employment for Provincially regulated industries. To vary these minimum standards requires compelling reasons or facts. Granting this variance so that the Employer can hire additional staff is not sufficient reason.
That refusal was upheld by the Employment Standards Tribunal on reconsideration.
A similar result was reached in a variance application related to school crossing guards.2 A coalition of Victoria Area Parent Advisory Councils (“VPAC”) sought a variance to permit the school crossing guards to be paid a minimum of 1.5 hours each day, comprising of two 45 minute shifts. The VPAC argued that because it was a non-profit society it could not afford to pay crossing guards more than 1.5 hours per day, and that requiring higher compensation could result in the failure of the crossing guard program as a whole. The affected employees supported the variance. Nonetheless, the variance was refused. The Director noted that it is necessary to take into account all the workers in the Province in determining whether to grant a variance, and that mere support by affected employees is not sufficient to justify a variance. The Director determined that no benefit to employees would accrue if the variance was granted. That determination was upheld by the Tribunal.
Advantages and Disadvantages of Variances
Variances are a useful tool where a group of employees will be subject to the same exceptions to that Act. That is especially true where only a few employees are employed at the time of application, and the employer expects to hire more employees under the same terms of employment - a variance can be granted that covers future employees. Variances are also commonly used following a union decertification. For example, where a collective agreement provides for a work schedule not consistent with the Act, after the collective agreement is
- Victoria Confederation of Parent Advisory Councils (Re), BC EST # D436/01
no longer in force, without modifying the work schedule, the employer would be in violation of the Act. A variance could be granted in anticipation of that change.
While variances are broader than averaging agreements, they are not without limits. Variance are not available to modify to the requirement that employees have 8 hours free form work between shifts, except in cases of emergencies. Variances to overtime wages are not available beyond the 12-hour double time threshold, or the 40-hour weekly maximum. Variances are also not helpful where a schedule change must occur quickly - advance consent from the Director is required.
The requirement that employees not work “excessive hours” cannot be varied - it applies to both averaging agreements and variances. That legislative carve-out is consistent with the underlying policy rationale of the Act
- averaging agreements and variances must still preserve “decent” employment relationships.
“Excessive hours” is not defined in the Act, but it is usually defined by reference to some objectively demonstrated adverse effect on an employee’s health or safety.3 Even where detriment is shown, the whole employment relationship must be taken into account, including the employment context, the circumstances of the work, the period of time over which the hours are being worked, and any other circumstances peculiar to the
individual being required or allowed to work the hours. In some contexts “excessive hours” may be less than 12 hours.4
In Re Blackburn (16 December 1998), BCEST #D543/98 (Collingwood), the Tribunal determined that there are four questions to ask in considering whether an employee could rightfully refuse work because his or her health was at risk: (1) Did the employee honestly believe that his or her health or wellbeing was endangered? (2) Did the employee communicate this belief to the supervisor in a reasonable and adequate manner? (3) Was this belief reasonable in the circumstances? (4) Was the danger sufficiently serious to justify the particular action the employee took? If the answer to all four of those questions are yes, it is possible that the scheduling offends the prohibition on excessive hours in the Act, and offends the decency principle underlying it.
Exclusions from the Act
There are several categories of employees and kinds of professions that are specifically excluded from the Act. The heart of the Act largely informs the nature of the exceptions. Where the balance of power between employer and employee is more equal such that the likelihood for exploitation or decency offending employment conditions are lower, employees do not require the protection of the legislature, and have been specifically excluded from the Employment Standards Act.
The classic example of this kind of exception are self-governed professions, including medical professionals, foresters, real estate agents, engineers, architects, accountants, and lawyers. For the exception to apply to an individual, that individual must be a member of the given profession or occupation, and must also be employed in that role. However, an employee need not exclusively be carrying on work in the excluded profession to qualify for an exclusion. In Re Mollenhauer (22 January 2009) BCEST #D013/09 (Stevenson), an employee argued that although he was a professional engineer, he only performed engineering work 15% of the time, and therefore 85% of his employment income should be subject to the minimum standards of the Act. The Employment Standards Branch rejected that argument, finding that it would be extremely inefficient and
- Re Johnston (2 July 2010), BCEST #D071/10 (Stevenson).
impractical to apply the exclusion only to the portions of an individual’s employment that was excluded. In that case, 15% engineering work was sufficient to bring the individual’s entire employment within the exception to the Act.
Managers are another common category of exception, although they are only excluded from the hours of work, overtime, and statutory holidays provisions of the Act. A manager’s principal responsibility must be supervising or directing human resources, or alternatively, a manager must be employed in an executive capacity. In determining whether an individual is a manager for the purposes of the Act, the Employment Standards Branch will look to the whole employment relationship and its context to determine the true nature of the relationship. A person who works as a lead hand or supervisor is usually not considered a manager. Despite some managerial oversight, if an employee’s primary duties are production related, they are unlikely to be found to be a manager. Even where an employee is a manager, depending on the terms of the employment agreement, that manager could be entitled to “overtime”. In Kamloops Golf & Country Club Ltd. v. British Columbia (Director of Employment Standards), 2002 BCSC 1324, the B.C. Supreme Court upheld a determination of the Director awarding unpaid wages to a manager, whose employment contract specified that he would receive a salary and work 40 hours per week. the Manager worked more that those weekly hours, and the Employment Standards Branch agreed that overtime was owing, notwithstanding the fact that the employee was a manager.
Independent contractors are also excluded from the Act. Whether an individual is an employee or an independent contractor is a fact specific determination. The Branch will consider the following factors in determining whether an individual is an independent contractor:
- Is the person under the control of the employer regarding the time, place, and way in which the work is done?
- Does the person own their own tools or use tools provided by the employer?
- Does the person have a chance of profit or risk of loss?
- How is the person paid?
- Has the individual signed an agreement as an independent contractor?
Unlike common law, there is no “dependent contractor” middle category in the Act, and for that reason, the independent contractor argument is often more successful for employers in the employment standards context than at common law.
The Act also provides for a number of other industry specific exclusions, including those for “high technology” companies, commissioned sales people, oil and gas field workers, truck drivers, loggers, and taxi drivers. Each industry may be excluded from one or more sections of the act, based on the character of that industry. For example, High Technology companies (where more than 50% of employees are high technology professionals, or managers of those professionals) are excluded from requirements about hours of work and statutory holidays, while commissioned sales people are also excluded from minimum wage requirements. The Act contains detailed provisions regarding those targeted exclusions, and provides additional guidance for specific situations.
Unionized employees covered by a collective agreement are excluded from the Act, by the operation of s. 3. Where the collective agreement has any provision about overtime or hours of work, those portions of the Act do not apply. However, where the collective agreement is silent, the Act is deemed to be incorporated into the collective agreement.
Federally regulated employees are not subject to the Act. Employees of the federal government, armed forces, banks, cross border trucking, federal crown corporations, airlines and railways (except BC rail), communications, and marine shipping business are likely federally regulated.
Employers face continuous pressure to improve payroll efficiency and lower costs. Flexible work scheduling is one tool to achieve those goals, and is provided for in the employment standards context through the use of averaging agreements, variances, and in some cases, outright exceptions to the requirements of the Act.
Averaging agreements are made between a single employee and employer, and address issues with daily overtime only. Variances are available more broadly, and can cover a group of employees, but require approval from the Director. Exceptions operate automatically, but the employer bears the burden of proving that an exception does in fact apply in the event a dispute arises.
In all cases, the underlying rationale of the Act must be preserved, employees must not be made to work excessive hours at the expense of their health, and working conditions must be decent. However, within those bounds, there are a wide range of scheduling arrangements available, and with careful planning, employers and employees should be able to find a compromise that benefits all parties involved.
Averaging Agreement or Variance? Quick Reference Chart
The proposed work schedule will average more than 40 hours per week.
Employees work more than 8 hours in a day, but still average 40 hours per week.
Employees work more than 8 hours in a day, but still average 40 hours per week, and that average is over a period longer than 4 weeks.
Averaging Agreement modified by a variance to change the duration of the averaging agreement.
The agreement must cover all employees, and there are some employees not in favour of the planned schedule.
Variance. Averaging agreements apply only to individual employees, and each affected employee’s consent is required.
The scheduling change must be immediate.
Averaging Agreement. Variances require a formal application be made to the Director, Averaging agreements can be implemented as soon as they are signed and the employee has received her copy.
The agreement is specific to a particular department rather than a set of employees
Variance. Averaging agreements are employee specific.
The proposed agreement covers something more than just overtime entitlement.
Variance. Averaging agreements deal exclusively with daily overtime requirements.