Hiring and Firing: How Franchisors and Franchisees Can ... · The Franchise Context Employment...

Hiring and Firing: How Franchisors and Franchisees Can Avoid Legal Pitfalls

Canadian Franchise AssociationPresented by Brian Wasyliw and Matthew BadrovApril 4, 2017

250 Yonge Street Suite 3300Toronto, Ontario M5B 2L7

Tel 416.603.0700Fax 416.603.6035

24 Hour 416.420.0738www.sherrardkuzz.com

Sherrard Kuzz LLP, Employment & Labour LawyersHiring and Firing - Current as of April 4, 2017Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.com 2

Agenda

1. The Franchise Context & Legal Landscape 2. Job Advertisements and Interviews3. Background and Reference Checks4. Job Offers5. The Employment Contract6. Terminating the Employment Relationship

Sherrard Kuzz LLP, Employment & Labour LawyersHiring and Firing - Current as of April 4, 2017Main 416.603.0700 / 24 Hour 416.420.0738 / www.sherrardkuzz.com

The Legal Landscape

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1. Human rights law2. Privacy law3. Contract law4. Common law


Human Rights Law

Legislation in all jurisdictions (federal and provincial) Protects right to equal treatment and freedom from

harassment Laws specify:Grounds of prohibited discrimination Prohibited practicesEnforcement mechanism

Prohibited grounds vary between jurisdictions but are mostly similar (i.e. sex, race, colour, creed, marital status…)

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Privacy Law Federal jurisdiction – Personal Information Protection

and Electronics Documents Act (PIPEDA) Provincial legislation in Alberta, BC, Quebec, and

Manitoba All other provinces – PIPEDA applies to provincially

regulated sector PIPEDA applies to “all personal information collected,

used and disclosed in the course of commercial activities”Arguably applies to recruitment process, but not

employment relationship

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The Franchise Context

Employment considerations when you become a franchisor: Finding employees stat! Keeping employees and avoiding costs associated with

turnover and employee dishonesty Start on the right foot

Recruitment/hiring policies and criteria Background and Reference Checks Employment contracts with termination clauses

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Job Advertisements and Interviews

Job AdvertisementsDescribe what job entailsDescribe essential duties and responsibilitiesState required qualifications, i.e. credentials and/or

experienceDetermine whether a candidate is capable of

performing the job

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Job Advertisements and Interviews InterviewsThe employer may expand the scope of job-related

questions to determine applicant's qualifications or ability to perform the essential duties of the job.

During and after the interview, take detailed notesMaintain interview records (regardless if candidate is

hired)

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Human Rights ConsiderationsApplies to protect candidates during the hiring processBalance between information necessary to assess

candidate versus information that makes you vulnerable to an allegation of discrimination

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Human Rights ConsiderationsAn advertisement or interview discussion cannot

directly or indirectly discriminate on a prohibited ground Examples: “Men wanted for GTA moving company” “Company seeks young, energetic sales associate”

Questions may lead to perceived discrimination based on a candidate’s place of origin, or national status (i.e. SIN, work authorization, professional credentials)

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Background and Reference Checks

In Ontario, lawful for an employer to conduct a pre-employment check of a candidate’s employment experience, academic credentials and criminal record

Must have consentMay make offer conditional upon consent provided

and check, if acceptable

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Social Media Checks

Facebook, Twitter, InstagramMake appropriate use of social mediaValuable toolConsider information you might find that is irrelevant

or illegal to rely on Have someone else not making the final decision do

the check

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Criminal Record ChecksVaries between provincesOntario Human Rights Code“Record of offences” means a conviction for, An offence in respect of which a pardon has been granted

under the Criminal Records Act (Canada) and has not been revoked, or

An offence in respect of any provincial law.

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Reference Checks Contact all references Don’t be too polite – Don’t be afraid to ask questions. Question an application with no references or “gaps”

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Job OffersEnsure all references checked and other

considerations are made before making an offerAvoid making verbal job offersAll job offers should be made in writing or

followed up with a formal letter

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The Offer Letter

Should include:Start dateSalary/wagesVacation entitlementGeneral dutiesTermination provisions

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Conditional OffersWhere employment is subject to the applicant

satisfying a condition, such as a:Reference checkBackground checkReview of contractual obligations to others

(i.e., confirming the applicant is not the subject of a non-competition provision)

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Employment Contracts

One of the best ‘security blankets’ for your franchiseMaximizes flexibilityPersonnel decisions need not turn on cost

Form of business insurance with highest ROI

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Employment Contracts- Tips

1. Don’t use a template2. Provide the contract well in advance of the first

day of employment3. Suggest he or she obtains professional advice4. Be open to reasonable changes5. Ensure the contract reflects the actual duties and

responsibilities of the employee

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In the absence of a written contract, the relationship is governed by the ‘common law’

Employment agreement like any other contract must have 3 elements:Offer, acceptance, consideration If one of these elements is missing, the

relationship is governed by the common law

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The requisite ‘Consideration’ is the job itself Essential that the offer is ‘accepted’ (evidenced

through employee’s signature) before starting employment.If the employee signs off after employment starts

(even at end of first day), enforceability is jeopardized.

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Employment Contracts Indefinite termDoes not specify end date‘Regular contract’

Fixed termMust be specific dates No additional notice requirement If the employee overstays end date, becomes a ‘regular’

employee, and employer loses benefit of fixed term contractConsider provisions addressing termination during the term

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Termination Provisions Entitlement upon termination can be limited by

termination clause Clause must provide for an amount equal to or greater

than statutory minimum Absent clear, enforceable termination clause,

employee is entitled to common law ‘reasonable’ notice of termination

In Quebec, slightly different approachContractual notice provision must be ‘reasonable’ at

the time of termination

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Termination Provisions

The entitlement provided for in the contract should comply with statutory minimumsThe contract should specifically state that where it is

inconsistent with the statute, the legislated minimum is the amount of entitlement

Severance provisions should be reviewed and amended whenever there is a change to the employment standards legislation

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Terminating Employment

Cause: no entitlement to notice, or pay in lieu thereofHigh threshold to meet and difficult to know

when metOften takes time to “build” a case for cause

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Without Cause:Notice of termination (or pay in lieu)SeveranceIn accordance with employment standards

legislation or common law (can be big difference) Franchisors should be mindful of risk of being

“tagged” with service accumulated at other franchise locations

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Ram v. Michael Lacombe Group

Employee worked at five different franchises over 24 years

Four of these locations had the same manager who also was the owner of the last location (where she worked for five years)

Court ultimately recognized her total length of service at all locations, not just her last employer

Awarded her 12 months of notice

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Terminating Employment Consider offer of “severance package” as incentive for

employee to sign release Just cause No entitlement, but may still make a “gratuitous” offer in

exchange for a release Without cause If employment contract, look to the termination provisions If not, look to employment standards legislation and

common law KEY: Something more than the minimum employment

standards entitlement must be provided in order for release to be enforceable!

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The goal is to be civil, concise and compassionate Be “to the point” – do not open the matter up for debate on the

merits of the decision No more than 2 management members – one taking notes Provide letter (offer) and explain next steps

Consider how to deal with franchise and/or personal property

Have a contingency plan in the event the employee becomes distressed or agitated

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The termination meeting:Plan aheadWho should be present?When to have meeting?Where to have meeting?What to say & do?

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Regardless of whether termination is for cause or without cause, provide the following: Written notice of termination (i.e. termination

letter)Record of Employment (“ROE”)Any necessary information pertaining to cessation

of benefits

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250 Yonge Street, Suite 3300Toronto, Ontario, Canada M5B 2L7

416.603.0700 Phone416.420.0738 24 Hour

416.603.6035 Faxwww.sherrardkuzz.com

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The information contained in this presentation/article is provided for general information purposes only and does not constitute legal or other professional advice, nor does accessing this information create a lawyer-client relationship. This presentation/article is current as of April 4, 2017 and applies only to Ontario, Canada, or such other laws of Canada as expressly indicated. Information about the law is checked for legal accuracy as at the date the presentation/article is prepared, but may become outdated as laws or policies change. For clarification or for legal or other professional assistance please contact Sherrard Kuzz LLP (or other counsel).

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