Why you should calculate average hours worked
There are several reasons employers estimate average hours worked. Some support budgeting and scheduling, while others help teams coordinate fairly across shifts. For background on federal work‑hours standards, see Government of Canada guidance on hours of work.
Planning your annual labour budget
Your employees all likely earn different amounts, whether it’s different salaries, different rates of pay, or different hours worked. Some employees also work overtime, which can complicate your labour forecasting. Estimating total annual working hours early can simplify labour budgeting and forecasting. If staffing levels change (for example, seasonal operations), revisit your estimates and adjust plans accordingly.
You might also need to revisit your labour budget throughout the year to account for shifts in employment levels, especially if your business goes through busy seasons or only operates for part of the year. You can calculate the average hours worked throughout the year to adjust when necessary for these shifts.
Calculating hourly wages
Minimum wage rates and standards are set by federal and provincial/territorial rules. Rates and entitlements can vary by location and industry; review current official guidance for your situation. Estimating average annual hours can also help you align pay planning with your budget and avoid committing to rates that don’t fit your cost model.
Creating pay period schedules
Many organizations pay weekly, bi‑weekly, or semi‑monthly; the cadence you choose typically depends on your operations and cash‑flow patterns. Payroll platforms and accounting software can help you model and administer your pay schedule, and some teams work with an external accountant or payroll specialist.
Most payroll and accounting software platforms can help you figure this out and administer proper pay for your employees. You can also choose to hire a dedicated payroll professional to help you figure this out.
Assessing employee work-life balance
If some employees regularly work extra hours, review workload distribution and resourcing. Sustained overtime can contribute to burnout and impact culture and productivity. Consider options such as clear priorities, flexible scheduling, or benefits that support wellbeing.
Beyond adjusting staffing levels, there are various measures you can take to alleviate any work-life imbalance your employees may be facing. Implementing attractive benefits, offering flexible work arrangements, and overhauling company culture to prioritize wellness are just a few examples.
Total work hours in a year
A commonly cited figure is 2,080 hours (52 weeks × 40 hours), but this can overlook regional holidays, vacation and other leave, overtime, and scheduling differences. Use it only as a rough starting point, then adjust for your policies and applicable holidays/leave.
Calculating work hours per year
Your payroll is likely digitized, and your employees’ work hours are likely centralized and stored in a database. If this isn’t the case, here are some guidelines on calculating your work hours per year:
1. Determine standard hours worked each week
Start with standard weekly hours. If schedules vary, use a representative average (for example, monthly) and distinguish regular from overtime hours where applicable.
2. Multiply by 52
Multiply by the number of weeks you operate (often 52 for year‑round schedules; fewer for seasonal operations).
3. Calculate paid time off amounts
Account for statutory holidays and paid/unpaid leave per your policy and applicable standards (which can vary by province/territory and employer category). Then subtract planned time off to estimate net work hours.
4. Subtract total time off from annual hours
Subtract leave and holidays from gross hours to estimate annual working hours. Adjust during the year if schedules change.
The risks of not calculating total annual work hours
Accurate hour records help manage fatigue risks and support alignment with applicable standards (for example, daily/weekly limits or rest periods set out in federal or provincial/territorial guidance). While there isn’t a single annual cap, many rules address hours and rest in a day or week. Tracking hours and using them to inform schedules can support wellbeing and operational reliability.
Calculating the total annual working hours and utilizing these figures to inform company policies is paramount, as doing so helps protect your employees’ wellbeing and keeps your organization running efficiently.
