How to Handle Overtime the Right Way

Managing overtime isn’t just about keeping payroll in check — it’s about protecting your team, staying compliant with employment laws, and ensuring your business runs smoothly. Yet many employers find themselves overwhelmed, especially during busy seasons or when unexpected projects hit.

Handled the wrong way, overtime can lead to burnout, high turnover, legal issues, and strained cash flow. Handled the right way, it can boost productivity, support growth, and keep your workforce motivated.

Here’s how to manage overtime effectively, ethically, and strategically.

1. Know the Laws Before Overtime Begins

One of the biggest mistakes businesses make is assuming overtime rules are flexible. They’re not. Employment standards legislation in your province clearly outlines:

• When overtime begins

• Maximum allowable hours

• Required rest periods

• Rules around averaging agreements

• How overtime pay must be calculated

Staying compliant isn’t optional — it’s a responsibility.

2. Track Hours Accurately and Transparently

Overtime disputes almost always start with murky timekeeping.

To prevent confusion:

• Use reliable, automated time-tracking tools

• Avoid manual entries whenever possible

• Keep consistent records for all employees

• Ensure managers approve hours daily or weekly

Accurate tracking does two things: it keeps you compliant, and it reassures employees that their time is being respected.

3. Plan Ahead for High-Demand Periods

Unexpected overtime bursts usually aren’t unexpected — they’re predictable.

Look at historical trends to identify periods where demand spikes. Tax season, year-end, inventory cycles, and holiday sales often require more hours, not fewer. Instead of relying on expensive last-minute overtime:

• Hire temporary staff

• Adjust schedules early

• Cross-train employees

• Pre-plan flexible shifts

• Set overtime caps for each department

The goal isn’t to eliminate overtime — it’s to manage it strategically.

4. Protect Employee Well-Being

Burnout is real, and overtime is often a silent contributor. Even your most committed people have limits. Ignoring those limits leads to:

• Increased sick days

• Lower productivity

• Higher turnover

• Mistakes and customer service issues

Encourage leaders to check in regularly, rotate responsibilities, and promote time off after high-overtime periods. Employees who feel protected are more loyal, more engaged, and more productive.

5. Control Overtime Costs Without Cutting Corners

Overtime isn’t cheap — and it shouldn’t be. But that doesn’t mean it has to derail your budget.

Here’s how to keep overtime cost-efficient:

• Approve overtime before it happens

• Use scheduling tools to detect creeping overtime

• Set weekly limits and communicate them

• Look for operational inefficiencies causing unnecessary extra hours

• Compare overtime spending to productivity results

When you understand both the cost and the return, you can make smarter business decisions.

6. Communicate Expectations Clearly

Overtime rules should never be an afterthought buried in a handbook.

Employees need to know:

• When overtime is permitted

• How to request approval

• How overtime will be paid

• What happens if limits are exceeded

Clear expectations create fairness and eliminate confusion — especially for growing teams and multi-location businesses.

7. Use Overtime Strategically for Growth

Overtime can be a powerful tool for business expansion when used intentionally. Instead of viewing it as a burden, think of it as a resource.

It can help you:

• Meet deadlines for new contracts

• Avoid turning away revenue

• Support rapid growth phases

• Bridge the gap while hiring

The right amount of overtime strengthens your business and helps you scale sustainably.

Set Up Your Business for Success

From the Greater Toronto Area to Kitchener, Cambridge, Waterloo, Hamilton, and Burlington, we’ve helped businesses of all sizes build overtime policies that are compliant, fair, and financially sound.

Whether you’re reworking your HR systems, struggling with payroll accuracy, or preparing for a busy season, now is the time to get your overtime processes right.

If you’d like help reviewing your overtime policies or improving your payroll systems, our team is here to guide you.