For this week’s blog, we have gathered a list of the top 10 mistakes commonly made by freelancers and startups when hiring their first employee. Avoiding these pitfalls will help start you off on the right foot and avoid the hiring headaches!
We’ve also covered our Top 10 list in this month’s SpringForward Legal Updates if you prefer to watch the webinar instead. Email us for the replay link.
#1 – Misclassifying your worker – Independent contractor, employee or freelancer?
Businesses often have a blend of workers. Make sure to know which classification your workers fall under. Employees can be hired for either a fixed or indefinite term whereas independent contractors are hired for services on a specific project and generally service their multiple clients/businesses.
It is helpful to decide ahead of time what the right hiring path is for your business and what type of worker best suits your business needs and to make sure the hiring contract reflects that classification of worker. Is the project short term or is this a permanent role you are trying to fill? What is the type of service and industry you are in? These answers will help with the decision-making process.
#2 – Missing CRA and statutory requirements
The following is a helpful checklist to ensure you are completing the required CRA and statutory requirements for a business with employees:
- Open an account with CRA for payroll source deductions
- Have employee(s) complete a TD-1 and a TD1ON Form
- Year-end T4A & CRA requirements
- Determine if your business is required to open a Workplace Safety and Insurance Board account.
- Distribute the Ministry of Labour Fair at Work Ontario Poster
- Workplaces covered by the Occupational Health and Safety Act (“OHSA”) must display a health and safety at work poster, have a copy of the Occupational Health and Safety Act available, as well as the names and locations of your workplace joint health and safety committee members;
- Health and safety awareness training is required for every worker and supervisor under the OHSA.
#3 – Mucking up the employment contract
When hiring new employees, remember that the employment contract is very important! Make sure that it includes at least the minimum standards for notice, benefits and vacation, etc. Focus on the termination clause, a lot, and specify employment and post-employment rights and obligations. Ensure that your new employee agrees to the terms of employment and signs before their first day or all of your hard work in creating a great employment agreement means nothing.
#4 – Mucking up recruitment
When hiring, remember that all stages of the employment relationship are covered by “employment” in the human rights legislation, including the recruitment stage. The hiring process cannot be discriminatory i.e., differential treatment based on disability, race or gender, etc. Always include this in your post and offer accessibility to those who need it.
#5 – Loosey-goosey remote working rules
For those employees that work remotely, ensure that you have a good policy in place that includes eligibility to work remotely, requirements around responsiveness and communications, digital security, productivity, unauthorized overtime and confidentiality. Protect your business’ digital assets during employment to make sure they are protected upon termination.
#6 – Being cynical about disability issues
You might be surprised, but this is the busiest area of employment law for lawyers. Always give the employee the benefit of the doubt (even if something about their doctor’s note and communications to you smells bad). Workplace “stress” and its medical symptoms are real and can be very expensive for an employer if you get it wrong. Employers are not without rights and recourse, but it’s tricky and one of the few areas we strongly recommend against a DIY approach.
#7 – Failing to manage performance before blow ups
Communication is key with your employees. Always provide constructive criticism along the way and make sure to document it. This helps keep emotions in check along the way and ensures that both the employer and employee are on the same page. It is very hard to fire for cause and you can’t do so without written records of sharing your performance concerns. Mere incompetence is not enough.
#8 – Giving away your ideas
Business owners are generally very passionate about what they do. Don’t let all of your hard work leave with your terminated employee. Have employees sign a confidentiality, non-compete and non-solicitation agreement which will limit their ability to solicit your clients and/or compete for those same clients in the same area.
#9 – Not protecting your ideas
Identify what your intellectual property is and pay a lawyer to protect it. Period!
#10 – Firing friends and family badly
Hiring friends and family can be great for your business. They generally have your best interests in mind and you already know that you like them! When the relationship ends, however, things can go badly. Make sure you protect your business upfront when the relationship is still good. Always have an employment contract in place. Prepare a termination letter and release ahead of time and do not complete the termination meeting alone, make sure to have another person present. It is also good to always provide the terminated employee with time to consider the termination package received.
We hope that the above list of mistakes to avoid will lessen the stress with the hiring of your first employee as your business grows. It’s an exciting time – congratulations!
Always remember to always write things down, set expectations upfront and hope for the best but plan for the worst. Employment contracts and policies are key to avoiding mishaps down the road.
If you have any questions about your first hire or would like help with drafting your employment contracts, feel free to get in touch!