Contractual Interpretation and Employment Stds – Banked OT Case

By: Bow River Law

Published: 22 August 2022

In DLC Cladding GP Ltd. v Schaus, 2022 CanLII 73465 (AB ESA) the Labour Relations Board as the Appeal Body pursuant to section 95(2)(b) of the Employment Standards Code (the “Code”) refused to award 603 unpaid overtime hours to an Employee and elected to award two years of unpaid vacation.

This case is important because it deals with interpretation principles and the interaction of a written employment agreement and the Code.


The following were the facts as described by Labour Relations Board:

  • DLC Cladding GP Ltd. (“Employer”) appealed the Order of an Employment Standards Officer (the “Officer”) ordering the Employer to pay Ryan Schaus (the “Employee”) $13,255.38 in unpaid vacation pay
  • The Employee commenced employment with the Employer in November 2014 but entered into a new employment agreement with the Employer in April of 2017 that stipulated that no overtime would be paid but the Employee would instead be provided with time off in lieu of overtime
  • When the Employee was terminated in February 2019, he advised the Employer that he wanted to be paid out his banked time.  No banked time was paid to him
  • The Employee alleged that there was an agreement whereby he would keep track of his additional or overtime hours worked and this would be considered “banked” time.  When he filled out at least one vacation request form, he indicated that he wanted the time taken from his “banked time”. In support the employee pointed out that his initial payroll records had entries for “Vacation Accrued” and “Vacation Paid” but such entries no longer appeared five months later and did not re-appear prior to his termination
  • The Employee kept records of his banked time by recording it on monthly calendar pages, which were entered in evidence but he had not shared his record of banked hours with the Employer. In addition, the calendar entries simply record the time worked and there was no description of the work performed on those dates or any indication of why additional work may have been performed. Nevertheless, the Employee alleged that the Employer clearly knew he was working significant hours
  • The Employee referred to Vacation/Leave of Absence Request and Response Forms” (the “Vacation Forms”) that he had completed for various periods and indicated he understood that when he took this time off, the time off was drawing against his banked time rather than his vacation time 
  • As the Employee was a salaried employee, his pay statements did not include a separate category for vacation which was not fixed until a year before the Appeal by the employer

Analysis / Conclusion

At the core of this dispute was differing interpretations of term of the employment agreement dealing with overtime. The Employee believed that he would receive banked time off meanwhile the Employer thought that it meant that the Employee could take time off when needed for things like medical appointments.

The Appeal Body found that based on their evidence and their conduct during the employment relationship, both the Employee and Employer genuinely believed their own interpretations of the employment agreement.

Nevertheless, the Appeal Body found that the language of the agreement was clear and unambiguous: “no overtime to be paid, however extended hours may be required from time to time, with time-off provided in lieu of overtime.”  The Appeal Body did not see any other interpretation that could be ascribed to this language. 

The Appeal Body expressly stated that it did not find that the Employee was entitled to overtime under the Code.  The Appeal Body held that the parties agreed to a greater benefit than the Code provided (i.e. that a manager is entitled to time off in lieu of working extended hours (i.e. overtime)).  That being the case, section 3 of the Code required the Employer to honour the agreement.

Although the Employee made a claim for payment of 603 extended hours, the Appeal Body refused to grant the requested remedy due to concerns with fairness to the Employer in simply having to accept the 603-hour figure, 2 years later, with no opportunity to review or inquire into the extended hours worked.  The Appeal Body further stated that it was equally not in a position to determine how many extended hours were worked or even to make an estimate of the same.

In order to strike a balance between the Employee’s interests and the Employer’s interests the Appeal Body held that all of the Employee’s time off over the period from April 2017 to February 2019 was drawn against his banked time and not his vacation entitlement.  This resulted in the employee not having been paid vacation during that period, so the Appeal Body awarded the employee that unpaid vacation.

My Take

This case exemplifies the need for employees to bring up over-time hours and the payment of the same or time off in lieu of pay to an employer in timely manner and not to allow significant over-time hours to accrue over years without some form of compensation. In this case, not only did the Employee flirt with expiry of the limitation period for his claim but the Appeal Body expressed serious concerns (without suggesting there was any fabrication of hours worked) regarding the Employee’s failure to provide the Employer with an opportunity to review or inquire into the extended hours worked. In a nutshell, employees not only need to track over-time hours but ought to provide descriptions of the over-time work and follow up with his or her employer regarding compensation for that work sooner rather than later.

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