Employment contracts are a farmer’s best insurance against costly and stressful disputes with workers hired to help out on the farm, a labour and employment lawyer told an Ag Days crowd recently.
Taking the time to understand your obligations to workers is an investment that can protect your wallet in the long run, Shereese Qually, labour and employment lawyer with Taylor McCaffrey LLP said.
“There are labour issues in every industry. When you are an employer, engaging employees, things go wrong. That is just the way it is,” Qually said.
Qually said it became clear during the recent controversy over new farm labour and safety legislation introduced in Alberta, that many Manitoba farmers have a lot to learn in this area.
“I’ve heard a lot of people saying, ‘What if that happens here?’ Everything there is already the standard in Manitoba,” she said. In fact, Manitoba offers fewer exemptions.
Qually said the most important thing employers can do to protect themselves from labour-related grief is to have an employment contract in place for every employee. There are so many things that you can do with these that proactively limit your liability,” she said.
“The family farm is changing. There are legal interventions evolving in every aspect of your operation. Whether it is leasing land or hiring employees, a handshake and goodwill are not sufficient anymore,” she said.
Contractor versus employee
Qually says the first step to establishing effective employee contracts is to determine how you are engaging workers, as independent contractors or employees.
“If someone is being paid as a contractor, but they should actually be an employee, there is significant risk to the employer,” she said.
To determine if your workers are in the proper roles, Qually suggests thinking about what level of supervision you have to provide the worker, who is supplying the equipment and if the worker’s function is integrated into the business.
“When you have someone come and build a fence for you, you’re not in the business of building fences. But, if you have someone come and run your combine or tractor or assist you with seeding, you are in fact in the business of doing that,” she said. “It is important to ask if their contribution complements your business or, is it integrated into your business? If it is a complement they would be considered an independent contractor.
“The most common place for this to become an issue is if your seasonal worker, whom you have employed as a contractor, in the off-season tries to apply for employment insurance (EI) and they are told that they don’t qualify because they were employed as a contractor not an employee.
“The EI representative may begin to look into the situation and see that they should have been an employee. That is generally where that situation begins to snowball,” said Qually. “If you have treated someone as a contractor and the court discovers that they are an employee, what is the risk associated?”
According to Qually, employers in this situation can end up retroactively owing Canadian Pension Plan, EI, other source deductions, as well as fines and interest from Canadian Revenue Agency (CRA).
Qually says one of the most common issues she deals with is when workers are terminated and they seek recourse.
“The most important thing to include in the employment contract is the termination piece. Make sure you are clear on the rights and obligations of termination,” she said. “The reality is that I can charge you between $500 to $1,500 now for a contract or $30,000 to $50,000 later, when things go bad.”
While producers may be concerned with the cost of having numerous employment contracts drawn up, Qually notes that in most cases, a general employment contract can be used for all employees.
For those looking to establish employment contracts, Qually recommends including a clear description of duties, Workplace, Health and Safety obligations, defined roles as an employee or independent contractor, a list of deliverables and associated time frames, as well as the rights and obligations around termination.
“One of the most misunderstood areas of termination is that employers think their obligations of termination are limited to the Employment Standards Code. But, that isn’t right,” said Qually.
There are two sources where an employee can pursue damages if they are fired without just cause, one is under the Employment Standards Code, and the second is the common law.
“But, producers should know that this is one of the easiest issues to address. Get a contract. If you have a valid, enforceable employment agreement with your employee, you can avoid wrongful dismissal claims. This is the easiest area of risk to mitigate,” said Qually.
Qually says employers should also familiarize themselves with the standard requirements for employee leaves and vacation time.
“For farm employees, the easiest way to manage vacation time and pay, especially if you are seasonally hiring them, is to pay their vacation percentage on their paycheques and schedule their vacation for when the work is complete,” she said.
In terms of leaves, employees are entitled to maternity, bereavement and family leave under the Employment Standards Code.
“An important thing to note is that if you don’t bring workers back after one of these leaves, there is a remedy under the code that they can pursue to be reinstated with back pay,” said Qually.
She also points out those engaging employees under the age of 16 should be aware that they require a permit.
“Statistically the ag industry violates this rule more than any other industry. If you have employees under 16, you need a permit. However, there is an exception for family members.”
Fines can reach up to $25,000 for corporations that are not following the Employment Standards Code.
“Understand your obligations, amend your practices and appreciate the risks if you are wrong,” said Qually.
She encourages employers to implement employment contracts and consult with the Employment Standards Branch to better understand their rights and obligations in order to mitigate the risk of costly disputes with employees.
For more information, visit “Employment Standards” on the Government of Manitoba website.