Navigating Employee Risks: Key insights for business owners

For any business owner, employment law can seem like a dense web of regulations, risks, and rights. From distinguishing between employees and contractors to understanding protected grounds for discrimination and making tough termination decisions, there’s a lot to juggle. But taking time to grasp these essentials doesn’t just protect your business—it helps create a healthy, productive workplace. Here’s a look at some of the legal essentials every Canadian business owner should know.

Employee or contractor? Know the difference

Let’s start with classification. The Canada Revenue Agency (CRA) has strict criteria for determining if someone is truly a contractor or an employee. Even if you consider someone an independent consultant, if they’re performing core business tasks under your direction, the CRA may classify them as an employee. And if that happens, you could face backdated payroll deductions.

The CRA considers factors like control over work, financial risk, and who provides the tools for the job. When in doubt, consult an HR professional or employment lawyer to help clarify this distinction. A little guidance now can save you from potential financial and compliance issues down the road.

Minimum and maximum hours of work

You might think if employees are paid, you can assign any hours necessary. However, Employment Standards doesn’t always agree – depending on the employment arrangement you may be obligated to pay minimum hours per shift. Additionally, employees can’t work indefinitely without rest. Setting clear, compliant schedules helps prevent burnout and promotes a positive work environment, benefiting both your team and your bottom line.

Protecting against discrimination and your duty to accommodate

Canadian businesses are required to avoid discrimination based on age, gender, race, religion, disability, and other protected grounds. Disabilities can include mental health conditions and addiction (not only substance-related but others as well), which means employers have a duty to accommodate employees facing these issues. This can be challenging for many employers, who may struggle to manage situations like mental health crises while respecting both employee privacy and workplace safety.

Employers also need to understand their rights. This is where guidance from an experienced HR professional becomes essential to help you navigate the finer points of accommodation, ensuring that the employee is supported while the business is protected.

Managing employee concerns

Addressing performance or safety concerns, managing incidents, or responding to employee complaints—all of these require careful handling. Documenting concerns and actions taken is essential, but so is following consistent protocols. An experienced HR consultant can help establish these protocols and offer expert guidance on employee rights and best practices, minimizing the risk of claims like wrongful or constructive dismissal. In situations involving sensitive accommodations or complex issues, having access to seasoned advice can make all the difference in handling things fairly and transparently.

When and how to Tterminate

Terminating employees is a high-stakes area, especially in Canada, where the distinction between “for cause” and “not for cause” terminations can be legally complex. For example, “for cause” terminations, like those for serious misconduct, mean the employee might not be entitled to severance. But Canadian standards for cause are stringent, and mishandling these terminations can lead to legal consequences.

“Not for cause” terminations, on the other hand, generally entitle the employee to severance. And while Employment Standards provides a minimum, the courts often award more based on factors like age, tenure, and re-employment prospects. Before deciding to terminate, consulting an HR professional or employment lawyer is a wise step to ensure compliance and reduce potential claims.

Legal guidance and fractional HR support

Managing employment law compliance may sound expensive, but here’s the thing: while legal support from an employment lawyer can run from $400 to $800 per hour, fractional HR consulting can provide a proactive, cost-effective approach. Senior HR consultants help you avoid issues before they escalate to legal matters. A skilled consultant can advise on everything from compliant hiring practices to fair, structured compensation, and performance management programs - protecting your business from costly risks and keeping you out of legal hot water.

And with the flexibility of fractional support, you have access to expert-level guidance whenever it’s needed, without committing to full-time costs. For many businesses, having an HR consultant on call can be a practical and affordable way to mitigate legal risks so you can focus on growth and productivity.

In short, understanding employment law basics is essential, but having access to professional HR or legal support is invaluable. Before making major employment decisions, consider reaching out to a trusted HR partner. Whether it’s developing a recruiting program, writing policies, clarifying employee classifications, managing accommodations, or terminating an employee, proactive support protects your business, builds a better workplace, and allows you to focus on what you do best: growing your company.