Flex Time in BC: What Employers Can Get Wrong About "Blending Hours"

It's a common scenario in BC small businesses: a full-time employee typically scheduled to work 8 hours per day, ended up working 9 hours on Monday, and left early on Friday after working only 7 hours. The owner and employee call it even. Both are happy with the arrangement. It's framed as "flex-time", and the owner calls it a benefit to the employee. Of course, it's also benefiting the employer because they just avoided paying that extra hour worked on Monday at overtime rates.

Unfortunately, it's not legal. Barring any special Employment Standards Act exemption, or a valid averaging agreement, that employee should have been able to get paid or bank that extra hour worked at time-and-one-half. Even if the employee asked for the arrangement, it still goes against the employment law in BC.

In the BC small businesses I've worked with, the owners and employees often have very friendly, casual arrangements such as this one. The owner knows the employee has verbally accepted the arrangement and even said it works well for them. And everything goes well, until the employee becomes disgruntled in that job or leaves and makes a complaint to the BC Employment Standards Branch.

Then the owner can face penalties, investigation costs, backpay and interest. Not just regarding the employee who made the formal complaint, but potentially for other employees who were not paid proper overtime rates.

A decade ago, it was unusual for a BC worker to thoroughly understand their rights under the BC Employment Standards Act. But in 2026, every employee has an employment lawyer in their pocket who educates them in plain language on exactly how they are "getting cheated" by their boss in about 3 minutes flat. It's called ChatGPT and it's free.

This article gets into the specifics around overtime, averaging agreements and more under the BC Employment Standards Act. Starting with a recent ESA investigation and subsequent tribunal decision that highlights how things can start off in a seemingly agreeable fashion and end up costing the company thousands of dollars after the employee quits.

Complaints often arise after the resignation

Employees have been known to agree to interesting solutions offered by the owner and take advantage of what seems to the owner to be a beneficial arrangement. But then, once that employee quits, the story changes right around the time they file a formal complaint with the BC Employment Standards Branch. An employee may even say they prefer flex-time to overtime pay. But agreeing to bank and then take time off doesn't mean the owner can bypass the time-and-one-half daily overtime rules under BC employment law.

Let's look at a recent tribunal decision on just how sour things can turn once an employee quits the job. In Cranbrook Interior Woodwork Ltd. v. Kempf, 2026 BCCRT 1221, the company said employees could bank extra hours at straight time and use them for paid days off or even materials from the shop.

After one employee left, he complained to the Employment Standards Branch about unpaid overtime. The company paid over four thousand dollars to settle the complaint.

Then the company invoiced him for materials he had already paid for through his banked overtime hours. The company argued that settling the wage/overtime complaint meant those hours had been paid back to him, so he now owed money for the materials.

The tribunal disagreed and dismissed the claim. The materials were deemed already paid for. The settlement covered outstanding wages, including the unpaid overtime premium. It didn't give the company a right to charge him again.

The blended hours trap

Under the usual BC overtime rules, an employee earns time-and-one-half for hours worked over 8 and up to 12 in a day, and double time for hours over 12. Daily overtime can be owed even when the employee works fewer than 40 hours that week.

Weekly overtime is a separate calculation. Only the first 8 hours worked each day count toward the 40-hour threshold for weekly overtime calculations. Weekly hours over that threshold are paid at time-and-one-half. Adding up the week's total and seeing 40 hours or less is not enough to tell you whether any daily overtime is owed.

Special rules may apply

Managers who meet the legal definition of such under the BC Employment Standards Regulation are excluded from the overtime rules, but putting the word Manager in their job title doesn't settle that question. Their actual duties matter. Their employment agreement may also provide pay entitlements beyond what the Act requires. I cover this in more detail in Managers and Overtime in BC: Common Mistakes Employers Make.

An approved variance from the BC Employment Standards Branch can change the rules that apply to a workplace. Variances are unusual in BC, but if you have one, check its terms before deciding what overtime is owed.

Averaging agreements: what you're missing

A valid averaging agreement can allow longer scheduled days without the usual daily overtime. But there's more to it than simply verbally agreeing to balance the hours out by the end of the pay period.

Under the standard BC requirements, the agreement must:

• Be in writing and signed by both the employer and the employee before it starts
• State whether hours will be averaged over 1, 2, 3 or 4 weeks
• Include a start date and an expiry date for that period
• Set out the work schedule for each day covered by the agreement
• State how many times, if any, the agreement may be repeated
• Schedule no more than 40 hours in a one-week period, or an average of 40 hours per week over a longer averaging period
• Be provided to the employee before the averaging period begins

An agreement doesn't remove every overtime entitlement. Extra hours beyond the daily schedule can still trigger overtime. Hours over 12 in a day must be paid at double time, and the average weekly overtime rules still apply.

Rules for banking overtime in BC

An employer can set up a time bank at an employee's written request. The bank holds overtime wages, so the balance needs to include the overtime premium. Recording each overtime hour as an hour of straight-time pay leaves the employee short.

The employee can ask to have some or all of the balance paid out, or take paid time off at a time you both agree to. If they ask in writing to close the bank, the balance must be paid on the next payday.

If you decide to close the bank, you must give one month's written notice. You then have six months after closure to settle the balance through pay, paid time off or a combination of both.

When employment ends, the remaining balance is due with final pay: within 48 hours if the employer ends the employment, or within six days if the employee quits. Vacation pay also applies to banked overtime wages.

Check your supervisor's playbook

If a supervisor tells an employee to stay late and then leave early another day, payroll needs to know the hours actually worked on each day. A weekly total won't show whether daily overtime was earned.

Check how those hours are recorded, what rate goes into the bank, and whether the employee's written request is on file. If you're relying on an averaging agreement, check that it meets the requirements and reflects the schedule being used.

If you find a shortfall, work out what's owing and address it. Putting a better policy in place for next month doesn't resolve an underpayment that has already happened.

You can always offer flex-time if your employees are seeking it. It's an excellent way to increase employee satisfaction and retention. Just make sure that you stay on the right side of the BC Employment Standards Act. That includes staying aware of which of your employees or managers might be exempt from overtime rules.

General information about employment standards for non-unionized employees in British Columbia, not legal advice. The applicable rules depend on the circumstances.

Senterra HR helps BC employers review their employment practices and HR documentation. Book a free and confidential consultation to discuss how your business handles day-to-day issues and what risks you may be facing with your current practices. For more practical tools, see our free HR resources and the free Employment Contract Red Flag Review.

Looking for free HR guides, frameworks, and checklists?

Need HR support for your BC business?

Book a free consultation to discuss your situation.

Related Reading