Payroll for shift crews: overtime, holidays and the true cost of labour

In a manufacturing plant, payroll is rarely simple. Ten-hour shifts, weekend crews, banked overtime, a statutory holiday in the middle of a production run. Each of these has rules, and getting them wrong means back-pay, penalties and a crew that stops trusting its paycheques.

This article covers the rules for Alberta-regulated manufacturers (most manufacturers in the province). It's part of our guide to the financial side of running a manufacturing business.

Overtime: 8 a day or 44 a week

In Alberta, overtime is hours worked over 8 in a day or 44 in a week, whichever adds up to more. It's paid at at least 1.5 times the regular rate.

Example: a week of 10-hour days

A welder earning $34 an hour works five 10-hour days (50 hours):

• Daily overtime: 2 hours a day × 5 days = 10 hours
• Weekly overtime: 50 − 44 = 6 hours

The greater is 10 hours. Pay for the week: 40 × $34 + 10 × $51 = $1,870.

Shops often only count the weekly overtime, which would underpay this welder by 4 hours at time and a half every week.

Longer shifts on purpose: averaging arrangements

If you want to run four 10-hour days, or a rotation that averages out over several weeks, Alberta lets you set up an averaging arrangement of 1 to 52 weeks. Overtime is then worked out on the average hours over the period. It must be in writing, with the work schedule, and you must give employees two weeks' written notice before it starts. Without one, the daily and weekly rules above apply to every shift.

Banked overtime

Instead of paying overtime, you can bank it as time off, if there's a written overtime agreement:

• Banked at 1 hour off for each overtime hour, paid at the regular rate when taken.
• It must be used within six months of the end of the pay period it was earned in.
• If it isn't taken in time, it must be paid out at 1.5 times.

Common problem: banks that quietly grow for a year. When an employee leaves, or six months pass, the whole bank has to be paid at time and a half, often at a higher wage than when it was earned. Track banked hours in payroll, not on a whiteboard.

General holidays

Alberta has nine general holidays: New Year's Day, Alberta Family Day, Good Friday, Victoria Day, Canada Day, Labour Day, Thanksgiving, Remembrance Day and Christmas Day. If you also recognize optional ones (Easter Monday, Heritage Day, National Day for Truth and Reconciliation, Boxing Day), the same rules apply to them.

Who qualifies: employees who have worked at least 30 workdays for you in the 12 months before the holiday.

What they're paid: based on their average daily wage, which is wages earned in the four weeks before the holiday divided by the days worked (overtime pay isn't included).

Example: running through Canada Day

Canada Day falls on a Wednesday and the plant runs a 10-hour shift to finish an order. The same welder earned $5,440 over 20 days in the previous four weeks, so the average daily wage is $272.

Pay for Canada Day: 10 hours × $51 + $272 = $782.

Vacation pay

• Two weeks of vacation after each of the first four years; three weeks after five years.
• Vacation pay of 4% of wages, rising to 6% after five years.

Wages for vacation pay purposes don't include overtime, general holiday pay or unearned bonuses.

Shift premiums

Alberta law doesn't require shift premiums for nights or weekends. If you pay them (many plants do, to keep night crews), put the policy in writing and make sure payroll applies it consistently.

WCB premiums

Every employer in a WCB-covered industry pays premiums per $100 of assessable earnings, at a rate set for its industry and adjusted for its own claims history. For 2026:

• The average rate across Alberta is $1.46 per $100. Manufacturing rates vary widely by type of work.
• Premiums apply to earnings up to $110,900 per worker.
• Your annual return of actual earnings is due by the end of February. Underestimating your payroll during the year means a catch-up bill.

A good safety record lowers your rate over time, and holding a Certificate of Recognition (COR) can reduce premiums further.

What an hour of labour really costs

Your quotes need a labour rate that covers everything, not just the wage. Using 2026 figures:

Example: the $34 welder

That's $41.68 for every hour paid. But not every paid hour is spent on a job. Breaks, clean-up, safety meetings, training and waiting for material all count. If 85% of paid hours land on jobs, each productive hour costs $41.68 ÷ 0.85 = about $49.

A shop quoting labour at $34, or even $40, is giving away money on every job. See job costing for building this into your rates.

(CPP and EI stop once an employee reaches the yearly maximums, so the burden is a little lower for your highest earners late in the year.)

Records to keep

• Daily hours worked for every employee (start, end, breaks), not just totals
• Written overtime, banking and averaging agreements
• Banked-hour balances and when they were earned
• Vacation and general holiday pay calculations

The bottom line

Shift payroll done right protects you from back-pay claims and gives you labour costs you can quote from. If you'd like us to run your payroll, set up banked time and averaging properly, or calculate your true labour rate, see our payroll service.