Canada: Tis’ the Season for Holiday Hiring We Made a List of Best Practices for Retailers …and Checked it Twice!
It’s that time of the year again! Retail employers are hiring and onboarding seasonal employees in preparation for the upcoming demanding holiday season. Although most seasonal employees are hired for a short term, which often commences in November/December and ends in January, these workers are still “true” employees with legal rights and protections under employment standards and human rights legislation.
In an effort to avoid starting off the New Year with litigation, employers who hire seasonal workers should use best hiring practices from the outset of the employment relationship to minimize litigation risk and liability. We recommend considering the following issues and potential pitfalls when hiring, managing and firing seasonal employees:
Written Fixed-Term Employment Contracts: Employers who hire seasonal employees should consider drafting a “fixed-term” employment contract. A properly drafted fixed-term contract reduces employer risk with respect to separation payments on termination. At minimum, a written fixed-term contract should set out compensation, the length of employment (including a start and end date), as well as any agreement with the employee in respect to work location, public holidays and/or minimum weekly hours. Employers should be aware that terminating an employee prior to the end date of a fixed-term contract may create liability for the remainder of the contractual term. In addition, if employment is continued beyond the end of the term there are additional, and potentially expensive, risks. Both of these risks can be eliminated with a properly drafted contract. It is important to provide the contract to job applicants in advance of employment so that there is a reasonable period to review and understand the terms. In addition, contracts must be signed by both parties before the first day of work.
Hiring High School Students: Employers should be mindful that in many jurisdictions, high school student employees (who must be at least fourteen (14) years of age) cannot be employed during regular school hours. There are also restrictions on the number of hours that these students can work while school is in session.
Human Rights Legislation when Hiring and Scheduling: Employers are tasked with achieving a proper balance between ensuring seasonal employees will be available to fulfil holiday scheduling needs and not discriminating against those employees on the basis of religion by considering religious “time-off requests” in hiring and scheduling decisions. In particular, to avoid incurring liability under human rights legislation at the hiring stage, retail employers should consider using non-discriminatory scoring systems. Considering holiday availability for work will expose the retailer to a possible human rights claim that a job applicant was discriminated against based on his or her religion. In addition, Managers tasked with scheduling should ensure that all religious “time-off” requests are taken seriously and that legal obligations to accommodate are satisfied.
Overtime Pay Threshold: Employees who work over the employment standards threshold in your jurisdiction must be paid overtime premium pay. In many jurisdictions that threshold is either 40 or 44 hours in a week and in some jurisdictions a daily overtime threshold of 8 hours might apply. Some employers may be able to reduce these costs by asking seasonal employees to sign an overtime averaging agreement, which allows the employer to average hours of work over two or three weeks to enure that the overtime threshold is not surpassed in any one week.
Entitlement to Public Holiday Pay: Whether employees are scheduled to work or not on Christmas Day, Boxing Day, and New Year’s Day they will likely be entitled to some additional payment for holiday pay, subject to eligibility requirements. For example, in Ontario, the employee must work his or her last regularly scheduled day of work before the public holiday and the first regularly scheduled day of work after the public holiday, unless there is reasonable cause to be absent. In addition, in many jurisdictions if a seasonal employee agrees to work on a public holiday there will likely be a legal requirement to pay premium pay.
Seasonal Employees Accrue Vacation Pay: Seasonal employees accrue vacation at a pay rate of four percent (4%), even if they do not take any time off before the end of their fixed-term contract. If vacation pay is not paid on each pay cheque, it must be paid out shortly after employment termination.
Written Notice to Terminate the Contract: Employers are encouraged to provide seasonal employees with written notice (which can be in the form of a termination letter or email), which expressly indicates that the employment will end on a specific date. This is imperative for two (2) reasons: (i) seasonal employees who work past their term may no longer be considered “fixed-term” and may now be considered “indefinite” employees whose legal rights have changed (and expanded); and, (ii) seasonal employees who are re-hired annually may claim that the employment relationship was continuous from year to year. Although seasonal employees may be encouraged to re-apply in the following year or “season”, the notice should clearly state that there is no guarantee of renewed employment.
Transition from Fixed to Indefinite Term Employee: Employers often “test out” seasonal employees during their term of employment, which may serve as a probationary period. In some cases, an employer may choose to hire on an employee beyond the fixed-term indicated in the employee’s contract. In that case, the employer should prepare a new employment contract that expressly sets out the new terms of employment with the employee, including, at minimum, any changes to compensation and the length of employment.
Ultimately, employers who strategically assess liability before hiring seasonal employees can effectively mitigate and reduce unnecessary litigation costs. If you are hiring seasonal employees, it is prudent to speak to an employment lawyer to ensure that you are complying with your labour and employment law obligations.
By: Jane M. Gooding, Filion Wakely Thorup Angeletti LLP
