A recent British Columbia decision is a useful reminder that an informal workplace arrangement can still create a wage problem. In Cranbrook Interior Woodwork Ltd. v. Kempf, 2026 BCCRT 1221, a worker used banked overtime hours at straight time to obtain shop materials and take paid time off. After an employment standards complaint was resolved, the employer tried to bill the worker for the materials. The Civil Resolution Tribunal dismissed the claim and found that the straight-time arrangement conflicted with the overtime protections in the Employment Standards Act.[1]
What Happened?
The employer and several employees had a verbal practice of banking additional hours and using the hours at a one-to-one rate to buy materials or take a paid day off. However, overtime hours were normally required to be paid at time and a half. After the employee later brought an unpaid overtime and vacation-pay complaint, the Employment Standards Branch assessed that overtime and vacation pay were owing. The employer paid the assessment, then issued a new invoice for the material that had earlier been treated as paid through banked overtime.[1]
Why Did the Employer’s Claim Fail?
The Tribunal found that the original arrangement could not be used to reduce the statutory overtime premium. In simple terms, an employer cannot agree with an employee to value overtime work at less than the minimum required by the Employment Standards Act, even if the employee receives something else in return.[1]
The employer had also already marked the material invoice as paid. The later payment of overtime wages corrected the outstanding wage entitlement; it did not reopen the original material purchase or create a fresh debt.
What Does This Mean for Employers?
The case is particularly relevant for small businesses with close-knit teams, where informal arrangements may seem flexible and convenient. A practice can be well-intentioned and still fail to meet employment standards.
Employers should be especially cautious about arrangements involving:
- overtime banked at straight time;
- time off instead of overtime pay;
- employee purchases paid through labour or payroll credits;
- verbal “swaps” of extra hours for tools, equipment, inventory, or services; and
- payroll adjustments made after a wage complaint.
A Safer Approach to Overtime Banking
Before allowing employees to bank overtime, confirm the rule in the applicable jurisdiction and document the arrangement in writing. The agreement should state the statutory overtime value, when time off will be taken, and how the balance will be recorded. Do not rely on a verbal understanding or a bookkeeping shortcut.
Employer Takeaway: Flexibility is useful only when it is compliant. If overtime is being exchanged for time off, goods, or another benefit, make sure the employee receives at least the statutory overtime value and that the process is recorded clearly in your payroll system.
Need help reviewing your overtime process? HR Covered can help you assess your policy, payroll records, and manager practices before a routine workplace arrangement turns into a wage claim.
Source
[1] *Cranbrook Interior Woodwork Ltd. v. Kempf*, 2026 BCCRT 1221 (CanLII)
