Overtime Averaging Agreement

Use an Overtime Averaging Agreement

and decrease your overtime costs

Averaging Agreement

An Averaging Agreement for overtime is a contractual agreement between an employee and your company that allows you to bypass overtime rates by averaging the employee’s hours of work over a period of 1, 2, 3, or 4 weeks. 

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Overview

Companies with employees working outside a standard work week will benefit from an Averaging Agreement. With an averaging agreement, costly overtime pay can be avoided while providing employees with more flexibility and a better work life balance. The request for more flexibility can be triggered by changes in an employee's personal circumstances requiring more work hours in a day which under a "normal" employment contract may trigger payment of overtime pay.    

The Averaging Agreement captures important elements such as duration of the Agreement and start and end date of the work schedule.  The work schedule states clearly the number of work hours in a day and in which day of the week.

There is strict employment law governing the implementation of Averaging Agreements. If making major changes to the Agreement, it is highly recommended that you seek legal review before implementing it.

How is the Averaging Agreement Used?

 Once customized for your company, the Overtime Averaging Agreement is intended to be used:

  • When extending an offer of employment to a prospective job candidate 
  • When making changes to the terms and conditions of employment of an existing employee.

Why do I need an Averaging Agreement?

It is less expensive than paying standard overtime rates. Where applicable, an averaging agreement decreases overtime costs by having an employee sign off that they’ve acknowledged that they have read, understand, and agree to give up paid or banked overtime by averaging their hours during a period where overtime is not calculated on hours that normally would be subject to overtime rules.

What are the Risks if I don't use an Averaging Agreement?

  • Company incurs significant overtime expenses to meet schedules that are outside the normal employment standards that regulate hours of work and overtime requirements. 
  • If you and your employee have verbally agreed on a modified work week but did not sign off on an Averaging Agreement, your company could be liable for expensive overtime pay and be in violation of employment law.

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Averaging Agreement  |  Accompanying Instructions for HR

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Contracts & Agreement Templates in this Kit

The template referenced on this page can be used on its own as a stand-alone tool, or in conjunction with other HR templates in the Contracts & Agreement Kit that includes the following documents:

Template Description

Offer Form Template

This form template ensures that all information about a candidate and position is collected and summarized, so that HR has the information they need to process an employment or independent contractor agreement.

Employment Contract Agreement Template

A contractual agreement template between the company and the employee that establishes the terms and conditions of employment.

Independent Contractor Agreement Template

This agreement template is intended to be used to clearly articulate and establish the terms and conditions of a contract between your company and an independent contractor.

Staff Policies Manual - Addendum to Employment Contract

An addendum document that outlines the standard terms of employment and conduct expectations where signature for adherence by the candidate is obtained as part of the Employment Contract Agreement and Independent Contractor Agreement documents.

Terms & Definitions - Addendum to Staff Policies Manual

An addendum document that provides definitions for the formal terms used in the Staff Policies Manual above.  

Overtime Averaging Agreement Template

A contractual agreement between an employee and your company allows you to bypass overtime rates by averaging the employee’s hours of work over a period of 1, 2, 3, or 4 weeks. 

Employee Handbook Acknowledgment Agreement Template

This is a contract agreement that is signed by Staff, in the presence of a witness, to acknowledge that they've read, understood, and will adhere to the Staff Policies section in your Employee Handbook.

Front Desk Service Agreement Template

An agreement used to obtain signed confirmation from front line and reception staff to acknowledge their understanding of company protocols and expected service levels. 

Involuntary Termination Authorization Form Template

This document is a template spreadsheet that will help your company calculate the costs associated with terminating an employee, and to obtain authorization to terminate. 

Non-Disclosure Agreement for Exploratory Discussions Template This template agreement is intended to be used to protect the interests of your company in situations where company-confidential information may be shared during exploratory discussions with prospective candidates.
Reference Check Request & Consent Template This document is a template for an email script used to obtain reference provider names and written consent from candidates to conduct reference checks.
Training Reimbursement Agreement Template A template for a contractual Agreement between your company and an employee embarking on a training initiative that exceeds a company-determined cost ceiling, where your company is expecting the training expenses to be reimbursed by the employee in certain scenarios.
Delegate Confidentiality Agreement Template This document contains instructions and a script for a conduct agreement between a manager and administrative-level staff. The script can be used when a manager needs to delegate work that may require access to sensitive or confidential information.