Banking hours

Banking hours

Banking Hours is a strategy to tackle seasonality issues and equalize employee pay cheques. The seasonal nature of the green industry results in erratic hours, fluctuating pay cheques, winter lay-offs and some unpleasant dealings with the EI officials. Many consider these issues to be the limiting factor in attracting people to the horticulture industry. Some employers, however, are facing this challenge head-on with a remuneration system commonly referred to as “hours banking.” The system allows employers and employees to put the emphasis on the total hours worked in a year, rather than the number of weeks that the employee needs to be laid off. With pay cheques equalized throughout the year, reliance on EI is eliminated or greatly reduced and employees can take time off during the winter months, knowing that their personal cash flow will still allow the mortgage and other bills to be paid.

Several years ago, Landscape Ontario’s Labour Task Force identified the seasonal nature of the landscape industry as a significant barrier. Who wants to consider horticulture as a career alternative when winter layoffs and unpleasant dealings with HRSD are an unavoidable part of the future? The concept of hours banking is often looked at as a viable alternative. But while some companies claim to use an hours banking system with great success, some feel it is impractical and others question the legality of such a system.

There is a great deal of misunderstanding surrounding the hours banking system. Some people believe it is supplementing Employment Insurance (EI) benefits with cash payments for extra hours worked during the winter months. Another misconception of hours banking is to save or bank hours worked while an employee is collecting EI premiums and then add these hours over a period of time during the spring or summer season. None of these are correct.

Hours banking is the equalization of the hours worked by an employee over the course of a year. If you work 2,000 hours, you get paid for 2,000 hours, but the system evens out the payment schedule. The system is similar to salary in that the employee’s pay cheque is similar from week to week. The employee is paid an hourly rate for actual hours worked, thereby avoiding the potential for misunderstood expectations on the part of both the employers and the employee.

If the many advantages of an hours banking system are so obvious, why isn’t it used by more seasonal businesses? For the smaller company, the administration required to calculate income taxes and other deductions on two different amounts might be onerous. There is also a problem of educating employees who are accustomed to pay cheques that reflect the actual hours worked each week, to see the benefits of an equalization system. Despite the many efforts by HRSD to educate seasonal workers, some people still feel entitled to EI benefits in the winter months.

The seasonal nature of the horticulture industry in Ontario dictates that long hours will be required at certain times of the year. While the long spring hours are offset by fewer, or no hours during the winter months, many seasonal employees will still work approximately 2,000 hours per year. To make the hours banking system work, employers and employees must form an agreement and the employer must pay WSIB premiums on the hours worked, not the hours paid. But if the system solves some the industry’s seasonal issues, it certainly deserves a closer look.

View a Sample hours banking agreement below.