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Exclusions, High Technology Companies - Regulation Part 7, Section 37.8

Last updated on August 27, 2021

Contents:

Summary
Text of Legislation
Policy Interpretation
Related Information

Summary

This section defines “high technology professional” and “high technology company” and provides that the hours of work and overtime and statutory holiday parts of the Act do not apply to high technology professionals. The section also explains how certain employees of high technology companies who are not themselves high technology professionals can enter into an averaging agreement.

Text of Legislation

37.8. (1) In this section:

"high technology company" means a company where more than 50 percent of employees meet the definition of a high technology professional, are managers of persons meeting the definition of a high technology professional or are employed in an executive capacity.

"high technology professional" means any of the following:

(a) an employee who is primarily engaged in applying the employee's specialized knowledge and professional judgment to investigate, analyze, design, develop, or engineer an information system that is based on computer and related technologies, or a prototype of such a system, but does not include a person employed to provide basic operational technical support;

(b) an employee who is primarily engaged in applying the employee's specialized knowledge and professional judgment to investigate, analyze, design, develop, engineer, integrate or implement a scientific or technological product, material, device or process or a prototype of such a product, material, device or process, but does not include a person employed to provide basic operational technical support;

(c) an employee who is primarily engaged in applying the employee's specialized knowledge and professional judgment to carry out scientific research and experimental development as defined in section 248 (1) of the Income Tax Act (Canada);

(d) an employee who is engaged as a sales or marketing professional in relation to

(i) a service or system described in paragraph (a),
(ii) a product, material, device or process described in paragraph (b), or
(iii) scientific research or experimental development described in paragraph (c),

but does not include a person employed in the retail sale of any of these things

(2) The following provisions do not apply to high technology professionals:

(a) Part 4, other than section 39, of the Act;

(b) Part 5 of the Act.

(3) An employee of a high technology company who is not a high technology professional may enter into an averaging agreement with the employee's employer under section 37 of the Act if the employer and employee also agree in writing that the scheduling requirement under section 37 (2) (a) (iv) of the Act does not apply.

(4) If an employee and an employer enter into the averaging agreement referred to in subsection (3) of this section,

(a) section 37 (2) (b), (3), (6), (10) and (12) of the Act does not apply to that averaging agreement, and

(b) section 37 (2) (a) (i) to (iii), (v) and (vi), (2) (c), (4), (5), (7) to (9), (11), (13) and (14) of the Act are deemed to be incorporated into the averaging agreement as terms of the agreement.

Policy Interpretation

Subsection (1)

Subsection (1) defines “high technology company” which is then used in subsections 37.8(3) and (4) as it relates to an employee who is not a “high technology professional”.

Subsection (1) also defines “high technology professional” which may apply whether or not the employee works for a “high technology company”.

(a) and (b)

  • “primarily”: the main purpose of an employee’s work activity must be the activities listed in the definition. This can be determined by comparing the work activities performed by the employee to the employment activities specified in the regulation, including reviewing:
  • the time spent performing each work activity. An employee who performs the work specified in the regulation incidentally to the main purpose of their work will not be considered a “high technology professional”;
  • a job description and employment contract;
  • the main purpose of the business. An employer whose business falls within the work activity in the regulation may be more likely to employ a “high technology professional”.

 
“specialized knowledge and professional judgment” is applied by an employee who:

  • possesses a high degree of knowledge and understanding of specialized technological and/or scientific fields with the ability to practically apply it to the task of investigating, analyzing, designing, developing or engineering an information system; and
  • exercises problem solving abilities and applies their own judgement and discretion to make independent decisions as opposed to performing mechanical or routine tasks;

“basic operational technical support” is performed by an employee with knowledge, experience and/or training on technical systems allowing for some exercise of professional judgment; as in one who typically follows a standard procedure to diagnose and resolve computer related problems.

“Scientific or technological product, material, device or process” may include items such as microscopes and measurement devices for research and lab applications such as chromatographs and spectrometers as well as commercially marketed products such as games software, drugs and medical devices.

(c)

Scientific research includes work undertaken for the purpose of achieving technological advancement in order to create new, or improve existing, materials, devices, products or processes. Such work includes incremental improvements to existing technology.

See s.248(1) of the Income Tax Act (Canada) for information on the “SRED” (scientific research and experimental development) tax exemption. Section 248(1) refers to “scientific research and experimental development” as “systematic investigation or research that is carried out in a field of science or technology by means of experiment or analysis”.

(d)

Although an employee who is engaged as a sales or marketing professional may fall under the definition of “high technology professional”, a person employed in the retail sale of any of the things listed in this section is not a “high technology professional”.

Subsection (2)

An employee performing the work of a “high technology professional” as defined in 37.8(1) is excluded from all of Part 4 of the Act, Hours of Work and Overtime, except s.39; and Part 5 of the Act, Statutory Holidays.

Subsection (3)

An employee of a “high technology company” who is not a “high technology professional” is entitled to full coverage under the Act. Those employees may sign an averaging agreement under s.37 of the Act.

This subsection allows the employee and the employer to agree in writing that the requirement for a daily schedule of hours in an averaging agreement under s.37(2)(a) (iv) of the Act does not apply.

Subsection (4)

  • If an employee and employer of a “high technology company” agree in writing that the daily schedule of hours required in an averaging agreement in s.37(2)(a) (iv) of the Act does not apply then the following provisions in s.37 do not apply to the agreement:

a.     The provision limiting a schedule to 40 hours in a one-week schedule or an average of 40 hours a week in a multi-week schedule;

b.     The provision requiring the employer to pay daily overtime if more hours are worked than were scheduled in the averaging agreement;

c.     The provision enabling an employee to make a written request to adjust the work schedule.

  • Before 37.8(4) of this Regulation can apply to section 37 of the Act the employee and employer must sign two agreements; one as required in 37.8(3) of this Regulation and the second as required under section 37(2)(a) of the Act.

    If an employee and employer enter into a written agreement under s.37 of the Act without signing a written agreement as noted in 37.8(3), s.37.8(4) of the Regulation has no effect and all provisions of s.37 of the Act apply.
  • If an employee and employer neglect to enter into a written agreement under s.37 of the Act when signing a written agreement under Regulation s.37.8(3), the agreement has no effect and sections 35, 36(1), and 40 of the Act apply to determine overtime, hours free from work and pay.
  • If an employee and employer enter into a written agreement under s.37 of the Act and under s.37.8(3) of the Regulation saying s.37(2)(a)(iv) of the Act does not apply, s.37.8(4) of the Regulation governs which subsections of the averaging agreement provisions in section 37 of the Act have effect.

Related Information

Related sections of the Act or Regulation

ESA

Other

Income Tax Act (Canada)