Introduction to the Ontario three-hour rule and employment standards

The Ontario three-hour rule protects employees by ensuring they receive a minimum amount of pay for reporting to work. Under the Employment Standards Act, 2000, this rule generally guarantees that if an employee, whether full-time or part-time, casual or temporary, is required to report for work but works less than three hours, they are entitled to be paid for three hours at their regular wage. This also applies if they are required to report to work but do not work.

By setting legal standards for minimum wage, overtime pay and vacation pay, the ESA helps safeguard the financial security of workers. Employees covered by the ESA benefit from these employment standards, which establish clear rights around hours of work, pay and other essential workplace protections.

Ontario’s three-hour rule for employers, explained

Employers must be aware of their obligation to provide minimum reporting pay when employees work less than three hours after reporting. According to Ontario’s three-hour rule, if an employee regularly works more than three hours a day and is required to report for work, employers must pay employees for at least three hours, even if they work less.

If the employee is available to work longer, but the employer cuts the shift hours to less than three, the employee is still entitled to be paid for three hours. This means they are paid for the time they actually worked, plus the difference to bring their total compensation up to three hours.

There are exceptions to this rule. The rule does not apply if the employer cannot provide work due to circumstances beyond the employer’s control, such as power outages or emergencies. To understand these obligations precisely, let’s look at the specific wording of the ESA.

The Ontario three-hour rule states:

“21.2 (1) If an employee who regularly works more than three hours a day is required to present himself or herself for work but works less than three hours, despite being available to work longer, the employer shall pay the employee wages for three hours, equal to the greater of, (a) the amount the employee earned for the time worked; and (b) wages equal to the employee’s regular rate for three hours of work.”

There is an exception for work stoppages beyond the employer’s control. The rule states:

“21.2 (2) Subsection (1) does not apply if the employer is unable to provide work for the employee because of fire, lightning, power failure, storms or similar causes beyond the employer’s control that result in the stopping of work.”

Minimum hours of work and wages

The three-hour rule is part of the Employment Standards Act, 2000 (ESA), which was amended by legislation such as the Fair Workplaces, Better Jobs Act, 2017, and subsequently impacted by the Making Ontario Open for Business Act, 2018. The legally mandated rule helps individuals and families in Ontario avoid financial insecurity caused by unpredictably reduced work hours by ensuring employees receive a minimum amount of pay when their shift is cut short after reporting. Previously, if a worker were sent home before their shift was scheduled to end, they would only receive payment for the hours they worked.

Workers cannot accurately budget or fulfil financial obligations if their expected working hours are unexpectedly reduced. Now, at the very minimum, employees can rest assured they will get a certain amount of pay even if their shift is cut short. This guarantee protects the employee’s entitlement to fair compensation.

As detailed in Section 21.2(1) of the ESA, payment for reporting pay is calculated as the greater of the amount earned for time worked or three hours at the employee’s regular rate. Although not legally required by the ESA, it is generally good practice for employers to give reasonable notice of schedule changes or cancellations to help maintain positive employee relations.

While the three-hour rule addresses reporting pay, employers may also be aware that broader, substantial, and unilateral changes to an employee’s terms of employment, such as significant reductions in hours or pay beyond the scope of this rule, could potentially lead to a claim of constructive dismissal under common law. This treats the fundamental changes as a termination of the original contract, potentially entitling the employee to notice or pay in lieu of notice.

Ontario’s three-hour rule for salaried employees

Employees who earn salaries are not exempt from Ontario’s three-hour rule. Although they are not paid hourly, they are entitled to the equivalent of three hours of their regular pay.

To calculate the hourly rate for a salaried employee, divide their weekly salary by the number of hours in their regular work week. This gives you the employee’s hourly rate, which determines minimum pay under the three-hour rule. Deductions from pay are only permitted if authorized by statute or a court order. As outlined in an earlier section, the employer does not have to adhere to the Ontario three-hour rule if they cannot provide work due to causes outside the employer’s control.

Hour rule exceptions

The three-hour rule primarily provides protection for employees who regularly work more than three hours a day. Therefore, it generally does not apply to employees who are consistently scheduled for shifts of three hours or less.

The three-hour rule applies to most employees, including students. But there are specific, narrow exemptions where it does not apply, such as for secondary school students who perform work under a work experience program authorized by the school board that operates the school in which the student is enrolled, or to an individual performing work under a program approved by a college of applied arts and technology or university, where the work is required for the completion of the program.

Certain professionals, such as architects, chiropractors, lawyers, medical doctors, professional engineers, pharmacists and veterinarians, are exempt from parts related to working hours. Here are some other situations where the three-hour rule does not apply:

• if an employee is unable or unwilling to work for the full three hours despite being required to report
• if an employee leaves early due to illness or injury
• if an employee has a pre-arranged appointment or other personal reason for leaving before completing three hours
• some positions in certain industries, like agriculture, certain government employees, and specific roles in residential building services

Overtime pay considerations

Overtime pay is another important aspect of Ontario’s employment standards. Employees who work more than 44 hours in a work week are entitled to overtime pay at a rate of at least one and a half times their regular pay. The calculation of overtime pay is based on the employee’s regular rate, and employers should be aware of how this affects their pay.

In some cases, employers and employees may agree, either electronically or in writing, to substitute paid time off (lieu time) for overtime pay. This lieu time must be used within three to twelve months of the overtime work week. It’s also important to note that certain jobs and workers are exempt from overtime pay under the Employment Standards Act, so checking the specific rules for your occupation is essential.

Public holidays and pay

Employers are required to provide their employees with paid Ontario public holidays to ensure they receive fair compensation even when not working on statutory holidays.

Public holiday pay is calculated as the total of all regular wages earned and vacation pay payable in the four work weeks before the work week with the public holiday, divided by 20. Employers are also ideally aware that variations to this calculation may apply depending on the employee’s work pattern or specific circumstances. Employers may consult the ESA or the Ministry’s resources for detailed guidance.

Employees who agree to work on a public holiday are entitled to both public holiday pay and premium pay at one-and-a-half times their regular rate for all hours worked.

Collective agreement implications

Collective agreements can play a significant role in determining how the three-hour rule and other employment standards are applied in the workplace. A collective agreement cannot explicitly exclude or contract out of the minimum pay provision of the three-hour rule, as ESA standards are minimums. They can, however, provide greater benefits.

If a collective agreement governs reporting pay, the compensation must equal three hours of regular wages, or more if specified. The total pay under a collective agreement can include wages, expenses, or both, as long as the amount meets or exceeds the ESA minimum. Employers are also ideally familiar with the terms of their collective agreement and the ESA to ensure they fulfill their rights and obligations and promote an equal and equitable workplace.

The Ontario three-hour rule and payroll

Rules like the three-hour rule fall under provincial or territorial jurisdiction in Canada, except for federally regulated industries. If you are responsible for your company’s payroll, it is highly important to know and follow the provincial rules. Companies with a global payroll may have additional obligations under Ontario law. For example, special rules apply to certain industries and job categories, such as wilderness guides, and other specific occupational roles.

Payroll administrators are also aware of statutory holiday pay, severance pay, termination pay, vacation time and the entitlements for two weeks and three weeks of vacation based on years of service, such as five or more years. Mass layoffs within a six-month period may trigger additional severance obligations. Leaves related to family members, and requirements for two weeks’ notice or a week’s notice for certain employment changes, are also important payroll considerations. The minimum wage also varies by province.

If you are unsure or need quick answers, Ontario provides a guide to the Employment Standards Act. The Ontario Ministry of Labour, Immigration, Training and Skills Development website is another good resource.

With this guide, you now know more about Ontario’s three-hour rule (a critical component of the Employment Standards Act), helping you better understand your obligations to provide minimum reporting pay, navigate exceptions and comply with related standards for overtime and public holiday pay.