Interpretation Guidelines Manual British Columbia Employment Standards Act and Regulations

EMPLOYMENT STANDARDS ACT - PART 1 - INTRODUCTORY PROVISIONS

ESA Section 1 – Definitions – Regular Wage


Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information


Summary

This section contains definitions for terms used throughout the Employment Standards Act and its Regulation.


Text of Legislation

"regular wage" means

(a) if an employee is paid by the hour, the hourly wage,

(b) if an employee is paid on a flat rate, piece rate, commission or other incentive basis, the employee's wages in a pay period divided by the employee's total hours of work during that pay period,

(c) if an employee is paid a weekly wage, the weekly wage divided by the lesser of the employee's normal or average weekly hours of work,

(d) if an employee is paid a monthly wage, the monthly wage multiplied by 12 and divided by the product of 52 times the lesser of the employee's normal or average weekly hours of work, and

(e) if an employee is paid a yearly wage, the yearly wage divided by the product of 52 times the lesser of the employee's normal or average weekly hours of work.


Policy Interpretation

To determine an employee's entitlements, the Act requires compensation to be converted to an hourly rate, regardless of the method of payment.

Subsection (a)

Where an employee is paid an hourly wage, this is considered to be the “regular wage” for purposes of the Act.

Subsection (b)

Where an employee is paid on a flat rate, piece rate, commission or other incentive basis, regular wage is determined by dividing an employee's wages by the employee’s total hours of work during the same pay period.

Regardless of the calculation, the regular wage cannot be less than minimum wage.

Commission Sales

Refer to Employment Standards Regulation s. 37.14 for information on the application of legislation to a salesperson paid entirely or partly by commission.

Example – Flat Rate

A worker in a transmission repair shop is paid a book or “flat rate” for fixing a transmission in a car. The book states that the job should take 10 hours. The employer agrees to pay the employee 10 hours @ $25 per hour to do the job or a flat rate of $250, regardless of the actual hours of work. This does not make the employee’s rate of pay $25 per hour. If the employee completes the job in 6 hours he is paid $250.00. There is no overtime payable as the actual hours worked to do the job were not more than 8.

If the employee takes 20 hours to do the job, (two 10-hour days), and that was all the work performed in the pay period, the employee’s rate of pay would be $250 divided by 20 hours = $12.50 per hour. The employee would be entitled to be paid:
 

16 hours @ $12.50 per hour = $200.00
4 hours @ $18.75 per hour ($12.50 x 1.5) = $75.00 (Overtime wages)
Total straight time and overtime wages = $275.00
Total wages payable: $275.00 - $250 (Flat rate paid) = $25.00

Example – Piece Rate
A factory worker who is paid on a piece rate basis works one 10-hour day in the pay period. The employee packages nuts and bolts and is paid for each sealed package as follows
 
Large bolts - 200 @ $0.40 $80.00
Small bolts - 150 @ $0.30 $45.00
Total piece rate wages $125.00

Regular wage rate = $125.00 divided by 10 hours = $12.50 an hour. The employee would be entitled to be paid:
 
8 hours @ $12.50 per hour $100.00
2 hours @ $18.75 per hour ($12.50 x 1.5) $37.50 (Overtime wages)
Total wages payable: $137.50

Example - Commission

The regular wage of an employee earning a commission paid on a bi-weekly basis is calculated according to the following formula: In the 2-week pay period the employee received $1,645.00 and worked 8 hours a day, 6 days a week totaling 96 hours during the pay period. The regular wage is calculated in the following manner:

$1,645 divided by 96 hours = $17.14 per hour is the regular wage. The employee would be entitled to be paid:
 
80 hours @ $17.14 per hour = $1371.20
16 hours @ $25.71 per hour ($17.14 x 1.5) = $411.36 (Overtime wages)
Total straight time and overtime wages: = $1,782.56
Total wages payable: $1,782.56 – $1,645.00 (Wages paid) = $137.56

Note: Refer to Employment Standards Regulation s. 37.14 for information on the application of legislation to salespersons paid in whole or in part by commission.

Subsection (c)

When an employee is paid a weekly wage:

Weekly wage divided by lesser of normal or average weekly hours of work.

Subsection (d)

When an employee is paid a monthly wage:
Monthly wage X 12 divided by 52 times lesser of normal or average weekly hours

Example:

Tom works in a downtown office as a receptionist and has a monthly salary of $3,000/month. Tom’s daily working schedule is 8:00 am to 5:00 pm with a one hour unpaid lunch break for a total of 8 hours worked per day, 5 days per week, for a total of 40 hours per week. Based on his monthly salary, regular wage would be calculated as follows:

$3,000 X 12 months = $36,000/year divided by 52 weeks = $692.31/week
$692.31/week divided by 40 hours per week = $17.31/hour regular wage

Subsection (e)

When an employee is paid a yearly wage:
Yearly wage divided by 52 times lesser of normal or average weekly hours of work.

Example:

A sales manager in a car dealership has a yearly salary of $60,000/year. His weekly working schedule is 48 hours per week. Based on the yearly salary, the regular wage would be calculated as follows: $60,000 divided by (52 weeks X 48 hours. per week = 2496) = $24.04/hour regular wage

“Normal” or “Average” weekly hours of work

Establishing “normal” or “average” weekly hours of work is determined by the circumstances of each employment situation.

“Normal” weekly hours are the weekly hours an employee is regularly expected to work. “Normal” weekly hours refers to a circumstance in which the employee has a consistent schedule of hours of work from week to week as part of their conditions of employment and those hours usually do not fluctuate from week to week.

Where “normal” weekly hours of work cannot be established, such as when hours of work fluctuate, “average” weekly hours of work will be used.

The period in which to determine “average” weekly hours of work is not provided by statute. Therefore, the director will use the period of employment up to 6 months before the earlier of the date of the complaint or termination of employment. Where a complaint has not been filed, the director will use the period of employment up to 6 months before the director first told the employer of the investigation.


Related Information

ESA

ESR

Other

See Employment Standards Factsheets

Factsheets

Minimum Wage

High Technology Professionals

Hours of Work and Overtime Rules

Keeping Records

Silviculture Workers