Five basics every startup & growing business should know about employment law
Growing a business takes people. Eventually, many startups and growing businesses hire employees and become an employer. But creating an employment relationship carries consequences: the law grants “employees” certain benefits and protections – and imposes on employers certain obligations and liabilities. There’s much to know about being an employer. Here are five employment law basics to get you started.
- Know and comply with employment standards laws, but remember: they’re just minimums.
Obtain a copy of the applicable employment standards laws, read them and keep them handy. Every province has employment standards laws and there’s a federal law applicable to federally-regulated employers (different than federally-incorporated employers, and including, for example, banks, airports and airlines, telephone and cable systems and radio and television broadcasting). Employment standards laws generally consist of a statute and regulations, typically called employment or labour standards acts or codes. For example, the:
- N.B. Employment Standards Act.
- N.S. Labour Standards Code.
- P.E.I. Employment Standards Act.
- N.L. Labour Standards Act.
- Federal Canada Labour Code.
Employment conditions. Employment standards laws apply to most employees and set minimum standards for certain employment conditions. These conditions vary between provinces (and federally), but commonly include minimum wages, hours of work, public holidays, vacation time and pay, and termination notice. They also often set out restrictions, such as on the employment of children, or the ability to terminate employees with a specified length of service (as in N.S.). And they typically mandate certain employee leave entitlements, such as maternity and parental, sick, bereavement and domestic violence leave.
Enforcement. A government arm is generally charged with enforcing the laws, investigating potential violations, providing information to employers and employees, and resolving employee complaints. An employer can ask the governmental arm questions, but it’s important to understand the response isn’t legal advice or a defence to a complaint or lawsuit.
Minimum only. Employers must also remember that the laws only set the minimum requirements; an employee could be entitled to more under an employment contract or at “common law” (the law resulting from judges’ decisions). For example, these laws typically establish the minimum termination notice to which an employee is entitled. However, the common law generally presumes an employee is entitled to “reasonable notice”: an individual assessment based on a range of relevant factors that often exceeds the employment standards law minimum.
- You have an employment contract with every employee – so put it in writing.
Every employer has an employment contract with every employee – even when there’s “nothing in writing” – but the issue then is ascertaining the contract terms, often leading to disagreements, lawsuits and expense (and stress), many of which employers can avoid by using a written employment contract.
Written contracts. A well-drafted and implemented written employment contract can be instrumental to avoiding and resolving disputes during or at the end of the employment relationship. But courts carefully scrutinize employment contracts and interpret any ambiguity in an employee’s favour, so it’s good practice to have legal counsel draft them.
Terms. A standard form employment agreement is useful, but employers should always review the contract (ideally with legal counsel) and, if required, customize it to the circumstances.
Timing. Set the terms of the employment contract at the time of hiring or before the worker is given a promotion or transfer – not after. An employer can’t unilaterally impose new employment conditions that fundamentally change the employment relationship after it’s started without giving the employee sufficient prior notice or consideration (something of value). If it doesn’t, then the employer could face a wrongful dismissal lawsuit.
- You need to accommodate employees’ human rights.
Every province has human rights laws (acts or codes), and there’s a federal human rights law applicable to federally-regulated employers. For example, the:
- N.B. Human Rights Act.
- N.S. Human Rights Act.
- P.E.I. Human Rights Act.
- N.L. Human Rights Act, 2010.
- Federal Canadian Human Rights Act.
No discrimination. Human rights laws apply to all employees and universally prohibit employers from discriminating, directly or indirectly, against their employees in employment (including in hiring, promoting and terminating) based on certain personal characteristics the law sets out. These characteristics vary, but generally include age, colour, creed, physical disability, mental disability, ethnic or national origin, family status, gender expression, gender identity, marital status, political belief, race, religion, sex (including sexual harassment, if not separately named), sexual orientation, and source of income.
Duty to accommodate. Human rights laws also obligate employers to accommodate their employees’ membership in a group with a protected personal characteristic: a legal duty to take steps to ensure a workplace condition doesn’t have a discriminatory effect on an employee, if it can do so without ‘undue hardship’. Undue hardship is a high standard that depends on several factors. Employers often find it challenging to understand and satisfy this duty, and failure to do so is a frequent source of human rights complaints against employers.
Enforcement. Human rights commissions are generally empowered to enforce human rights laws, investigate potential violations, provide information to employers and employees, and resolve employee complaints. If a complaint isn’t resolved, there may be a hearing before and a decision by a human rights tribunal. These hearings can be less formal than a court trial, but human rights tribunals typically have more options when it comes to remedying discrimination. Courts are essentially limited to ordering an employer to pay monetary compensation to a victim; tribunals can often also make additional orders against employers, such as training, policy implementation or revision, and reinstatement of a terminated employee (a significant power that’s not frequently exerted in some provinces, but still available).
- Every employer – even “white collar” ones – needs to take workplace health & safety seriously.
Provincial and federal occupational health and safety laws apply to all “employers” and “employees” – not just those in “high risk” sectors like, for example, construction. Occupational health and safety laws generally consist of a statute and often numerous regulations, though the name and contents of each law vary by province (or federally). For example, the:
- N.B. Occupational Health and Safety Act.
- N.S. Occupational Health and Safety Act.
- P.E.I. Health and Safety Act.
- N.L. Occupational Health and Safety Act.
- Federal Canada Labour Code.
“Safe” workplaces. Health and safety laws universally impose a general duty on employers to provide a safe workplace for all employees. This includes a work environment free from harassment and violence, including sexual harassment and bullying. While many consider this included in the general duty to provide a safe workplace, governments are increasingly imposing specific obligations respecting workplace violence and harassment. For example, effective April 1, 2019, employers of N.B. employees face new obligations to assess and mitigate workplace violence and harassment risks, and new liability exposure for failing to do so; the N.L. government recently announced that effective January 1, 2020, N.L. employers will also face new obligations to address workplace harassment and worker-on-worker violence. Employers must also warn employees about hazards, including safety, physical and ergonomic hazards and provide adequate training. In turn, employees have the right to refuse dangerous work. Health and safety laws also typically impose a duty on employers to investigate and deal with employee complaints.
Personal liability. Corporations have occupational health and safety obligations and risk corporate liability for violating them. But corporate directors, officers and supervisors share many of those obligations and liability risks personally, including personal liability under health and safety and criminal laws, and personal exposure to fines and even jail time.
Enforcement. Each province (and federally) charges a body to administer and enforce its occupational health and safety laws and educate employers and employees on their rights and obligations under them. Most make a large amount of information available to employers.
- Record-keeping is critical.
When an employer faces an employment-related lawsuit or a complaint or investigation under employment-related laws, its records are critical to its ability to respond – with proof of what happened.
Document, document, document. Ideally, employers document everything including, for example: training initiatives, policy and procedure reviews of all kinds (whether or not mandated by law); employee performance discussions and evaluations (formal and informal); and discipline meetings (including notes of verbal warnings).
Compliance. Various employment-related laws require employers to make certain records. For example, employment standards laws often require employers to make records of an employee’s: name and address; birth date; social insurance number; start date; hours worked; wages and deductions; vacation and vacation pay details; certificates respecting leaves of absence; and suspension, layoff and dismissal dates. Occupational health and safety laws often require employers to make training records, among others. And laws often require employers to keep certain records for a specific time period.
Production. It’s key to keep the records – and be able to find them when needed: employment-related laws typically require employers to produce those records to the body charged with enforcing them.
McInnes Cooper has prepared this document for information only; it is not intended to be legal advice. You should consult McInnes Cooper about your unique circumstances before acting on this information. McInnes Cooper excludes all liability for anything contained in this document and any use you make of it.
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