Averaging Agreements: How Employers Can (Legally) Change Your Overtime Threshold

Normally, overtime is measured week by week: cross your threshold in a given work week and the extra hours are overtime. Averaging changes the measuring stick. Instead of testing each week on its own, hours are averaged over a longer period so that a spike in one week can be offset by a lighter week — potentially reducing or eliminating overtime that a week-by-week count would produce.

That is a significant change to your rights, which is exactly why the law does not let an employer do it informally. Averaging must rest on a proper agreement or authorisation, and in some regimes it must equal the standard over the averaging period.

Under the Canada Labour Code, where the nature of the work requires an irregular distribution of hours, hours may be calculated — in the manner prescribed by regulation — as an average over a period of two or more weeks (s. 169(2)). That averaging applies for the term of a collective agreement or, failing that, for at most three years (s. 169(2.1)).

Two guardrails stand out: averaging is tied to work that genuinely requires irregular scheduling, and it is time-limited — it cannot run indefinitely on the employer's say-so.

In Québec, the Loi sur les normes du travail allows an employer to stagger (étaler) hours on a basis other than weekly — but only with the authorisation of the CNESST, or under a collective agreement or decree (art. 53). And there is a substantive condition: the average must be equivalent to the standard work week over the period. Averaging cannot be used to quietly push the norm above 40 hours; it can only redistribute hours around it.

If there is no CNESST authorisation (and no collective agreement or decree providing for it), the ordinary 40-hour weekly threshold (art. 52) continues to apply, week by week.

In Ontario, the Employment Standards Act, 2000 permits hours to be averaged only under a compliant averaging agreement (s. 22(2)). Without such an agreement meeting the Act's requirements, overtime is measured against the firm 44-hour weekly threshold (s. 22(1)) — every week, on its own.

Here is the practical rule to carry with you. Averaging is the exception, and it only works when the specific conditions are met — irregular-work averaging within time limits federally, CNESST-authorised staggering that equals the standard in Québec, a compliant written agreement in Ontario. Without a valid averaging agreement, the firm weekly threshold applies: 40 hours federally and in Québec, 44 hours in Ontario.

Many "we average your hours" claims do not survive scrutiny because there is no authorised agreement behind them — just an informal practice the employer finds convenient. An informal practice is not an averaging agreement.

• Ask to see it in writing. There should be a written, authorised averaging agreement — not a verbal "that's how we do it."
• Check the authorisation. In Québec, look for CNESST authorisation (or a collective agreement / decree). Federally, confirm the work genuinely requires irregular scheduling and that the arrangement is within its time limit (up to three years absent a collective agreement).
• Check that the average equals the standard (Québec) and that the agreement meets the Act's requirements (Ontario).
• If there is no valid agreement, count overtime on the firm weekly threshold — 40 hours (federal/Québec) or 44 hours (Ontario) — for each week separately.

• Unpaid Overtime in Canada: The Complete Guide
• Do Salaried Employees Get Overtime in Canada?
• Time Off in Lieu vs. Overtime Pay: Do You Have to Accept Banked Hours?