Can an employer roll unpaid overtime into future time off instead of paying it out in Ontario?

Yes, but only through a specific mechanism the Employment Standards Act, 2000 permits, not as a general employer discretion. Instead of paying overtime pay in cash, an employer and employee can agree in writing that the employee will take paid time off in lieu of overtime pay, calculated at the same premium rate the overtime pay itself would have been paid at, and taken within a period the Act allows before it needs to be paid out in cash instead if it hasn't been used.

This is different from an employer simply telling an employee to "take the time later" without a proper written agreement, or letting time off in lieu accumulate indefinitely without a clear plan for when it will actually be taken. If the arrangement doesn't meet the ESA's requirements, or the time isn't taken within the permitted window, the employer can end up owing the overtime in cash after all, on top of whatever informal time off was already given.

Because the paperwork and timing requirements matter as much as the underlying idea, employers wanting to use time off in lieu of overtime pay should set it up properly in writing rather than relying on an informal understanding with staff.