Many employees who work overtime choose to bank this time and take it as “time off with pay” rather than accepting cash payment for their overtime.
Historically, in Alberta, an employer who paid an employee for the “time off with pay” was only required to pay that employee at their standard hourly rate, rather than the overtime rate. For example, if over the course of a week an employee worked 8 hours of overtime, they would, in accordance with the Employment Standards Code (Alberta), be entitled to receive overtime pay at a rate of 1.5 times their normal pay rate. However, if they chose to bank this time and take it as time off with pay, they would only receive the time off at their usual wage rate – therefore they would only receive 8 hours of time off.
There have not been many cases where the Courts have considered how to calculate banked time for the purposes of child or spousal support, however, there is case out of British Columbia that suggests that if a payor of spousal or child support takes time off with pay at a lower rate than the cash value of the overtime, it may be reasonable to impute an income to that payor based on the actual cash value of the overtime, rather than what they received as income by taking time off instead. For instance, the above individual taking 8 hours of time off rather than 12 hours of pay (overtime pay at 1.5 x their usual wage rate) could be assessed an income based on the 12 hours of pay they could have received, rather than the 8 hours of pay they actually did receive. However, the case was clear that such an assessment would likely depend on whether there was any evidence to suggest a payor was purposefully taking the time off rather than the overtime for the sole reason of reducing their income and therefore their support obligations.
While this could lead to unexpected results for those in jobs where overtime is quite common, the Fair and Family-friendly Workplaces Act will ultimately make this less of a concern in Alberta. When the Act comes into Force in January of 2018, if employees choose to take time off with pay for overtime worked, employers will be required provide this time off at a rate of 1.5 hours for every hour of overtime worked. As a result, the individual in the above example will be able to choose between 12 hours of pay or 12 hours of time off for having worked 8 hours of overtime.
However, as a result, employees who take time off with pay will now be receiving greater time off and therefore greater pay than those hours actually worked. This pay will be reported in their T4s and as a result, their support will be calculated on the basis of that pay. This can be a significant boost to the income, and therefore the support payable by individuals in professions that work a lot of overtime. In particular, as per their Collective Agreement Officers with the Calgary Police Service receive overtime or time-off with pay in place of overtime at a rate of two times their regular wage rate. As the Collective Agreement applies to many City of Calgary Employees, the same provisions affect many employees with the City.
While it may seem somewhat understandable that Support would be calculated on the basis of the overtime pay, or the time-off pay, as it is the income that those individuals receive, the matter becomes more complicated as a result of the Collective Agreement’s requirements for when time-off in lieu of overtime may be taken. Any City of Calgary employee affected by the Collective Agreement does not have to take their time-off in lieu before the end of the subsequent year. As a result, an individual could bank a significant amount of time in one year, but not use that time until the following year. As a result, they would not be paid for the time-off in lieu until the following calendar year. The end result of this is that an individual could choose to postpone payment for hours worked – effectively, choosing to forego income that would otherwise be available to them, had they taken the overtime payment, and collecting that income in a subsequent year.
As Support is calculated on the individual’s yearly income it is possible that a Court could choose to determine an individual’s income on the basis of what they “could have been paid” had they taken the overtime payment, rather than what they actually end up being paid if they postpone their time-off in lieu to the next calendar year. While there is no case law on this matter, it is important to be aware of the risk that a Court might potentially look at hours worked as opposed to pay received. In such a case, an Employee of the City of Calgary, who chooses to bank their time for the following year, could potentially be paying Support at a higher rate than what they actually earned in that year.
The lawyers are Mincher Koeman Family Law Chambers have years of experience in assisting Clients with Child and Spousal Support matters. If you need legal assistance, we have the experience to help you. Contact us at 403 910 3000 or email@example.com.