Canadian HR Reporter

Canadian HR RepoRteR September 8, 2014 18 employmeNT law/FeaTURes Human Rights Tribunal of Ontar- io. e complainant alleged that being scheduled to work the mid- night shift had a negative effect on her childcare obligations and this amounted to discrimination on the basis of family status and marital status. Even though McDonald's did not participate in the franchise's day-to-day operations, including employee scheduling, the tribu- nal refused to dismiss the com- plaint against it on a preliminary basis. Instead, the tribunal held McDonald's may have authored discriminator y employment policies used by the franchisee or provided "operational support" connected to the allegations. A final decision addressing the merits of the human rights com- plaint has not yet been issued by the tribunal. Transfer of union bargaining rights In addition to liability for the employment practices of its fran- chisees, a franchisor can also find itself considered a co-employer with its franchisees for labour relations purposes. Specifically, if a labour board finds a franchisor and a franchisee share "common control and direction" over the franchise, it is possible for union bargaining rights to flow between them. is issue was considered by the Ontario Labour Relations Board in a case involving coffee retailer Second Cup. e board assessed whether a collective agreement between the Car- penters' Union and Second Cup should be extended to two fran- chisees who had renovated their stores using non-union workers. In concluding that the bar- gaining rights should flow to the franchisees for purposes of con- struction at the stores, the board noted the "very strict" franchis- ing agreement under which Sec- ond Cup had "fundamental con- trol over the way the franchisees conduct their business." e board also found compel- ling labour relations reasons to expand the union's bargaining rights — Second Cup, it held, should not be allowed to escape collective agreement obligations by using franchisees to perform work that would otherwise be performed by members of the union. How can a franchisor protect its brand, minimize risk? ere are important reasons why a franchisor may find it neces- sary to exercise control over its franchisees, such as the need to protect the brand and maximize franchise value. However, control can come at a cost. To minimize the possibil- ity a franchisor may attract liabil- ity as a co-employer, it should do at least two things. First, revisit franchise agree- ments and critically assess the level of control truly necessary. When drafting or amending a franchise agreement, a franchi- sor should ask itself how its goals can be achieved in a manner that results in the least amount of control over franchisees. There are many options to consider — operational, finan- cial and strategic, depending on the nature of the operations. For example, a franchisor may implement a declining scale of oversight as a franchisee achieves performance- and time-based benchmarks, or offer an incen- tive (not inducement) program to reward franchisees that vol- untarily follow the best practices. e bottom line is there is much to consider given what is poten- tially at stake. Second, be strategic about how and to what end control is exer- cised. To the extent that control is considered by a franchisor to be necessary or preferable, the franchisor should be strategic about how control is exercised and to what end. It may not be possible to eliminate the risk of joint liability. However, control that reduces the risk of a workplace complaint in the first place will also reduce the risk of a finding of joint liabil- ity. As such, it makes good busi- ness sense that every franchisor proactively consider how it can support its franchisees to imple- ment workplace best practices and avoid complaints. is may include offering fran- chisees voluntary training on applicable employment, labour, human rights and occupational health and safety laws (among others), as well as introduc- ing franchisees to strategies for maintaining positive employee relations that, in turn, minimize the risk of unionization. By helping to educate franchi- sees about the legal obligations owed to employees, the likeli- hood of employment-related liability — for the franchisee or franchisor — can be greatly reduced. Tom Gorsky and Andrew Ebejer are lawyers at Sherrard Kuzz, an employ- ment and labour law firm that repre- sents employers. ey can be reached at (416) 603-0700 or visit www. sherrardkuzz.com. NiagaraInstitute.com conferenceboard.ca Tools for Leadership Success Niagara Institute Leadership Training • Publications • Webinars in force. "e time spent by the salaried employee working at the affiliate is therefore taken into consider- ation when calculating the time for notice and indemnity pay- ments connected to termination." In sum, under French labour code, if the home employer re- fuses to repatriate the expat and terminates her employment, the employer will be subject to sub- stantial monetary compensation. ere have been a number of situations where a French sala- ried employee was sent tempo- rarily to a Canadian subsidiary of his French employer, but signed a local Canadian labour contract. In this case, strictly speaking, no expatriation occurred as the only contract executed was a local Ca- nadian (or Quebec) contract. However, in the event of ter- mination of this local contract in Canada, where less stringent rules are applied respecting the termi- nation of salaried employees with less than two years of seniority, French expatriates have filed com- plaints in France and were able to obtain compensation from the French company. Other factors may also lead to employer liability. While the na- ture and type of contract are still of upmost importance, the law ap- plicable to the contract as well as local laws superior to all employ- ment contracts are just as impor- tant. When preparing an expatria- tion contract, an employer must be mindful of the larger legal con- text both in the home country and the receiving country. For instance, in standard long- term expat situations, employers often include provisions stipulat- ing the home country laws will ap- ply in a case of a dispute, waiving the applicability of all local laws. However, such waiver provisions are often inapplicable, especially in the European Union. Moreover, in most countries, even where the applicability of foreign law would be recognized, local regulations that are of a mandatory or "public order" na- ture will apply nonetheless. In Canada, for instance, no employer can be exempt from minimum wage, working hours or vacation time regulations — even in the presence of a mutually agreed expat contract stipulating incompatible terms. Temporary workers under a local contract would also benefit from the same protection as local workers with respect to termination, up to the expiration of the work permit. In a case of termination, as sec- tion 124 of the Act Respecting Labour Standards in Quebec is deemed to protect public order, it would likely represent an available recourse to a terminated expat even if the expat contract stipu- lates a waiver of local laws. A failure to correctly identify the applicable laws in this context can also lead to the danger of dou- ble indemnity. As an illustration, labour laws in Mexico apply the doctrine of "immediacy," which roughly means an employer must terminate an employee for misconduct within one month of being informed of said cause for termination. Failure to do so could result in wrongful termina- tion, giving ground to monetary compensation payable in Mexico. Such compensation could be add- ed to any contractual compensa- tion or liability due in virtue of the home country regulations. While such awkward situations can eas- ily be prevented by experienced, local HR managers in the desti- nation country, if the contract is managed by the home country, the risk is higher. At the same time, as seen in the L'Oréal case, if a local employ- ment contract in a foreign coun- try stipulates severance of all ties from the home base and strictly limits the contract to a local juris- diction, that does not render the home base employer immune to the applicability of home country regulations that are mandatory under the home labour law or in relevant laws ensuring the stabil- ity of public order. Employers should also keep informed of any local rules that could potentially nullify provi- sions of a work contract or give a terminated employee an op- portunity to sue. Terminating an employee always involves costs, but the emotional and monetary expenses associated with termi- nating an expat can be far greater. To minimize the risk, get sound advice so the end of an expatria- tion does not turn into the begin- ning of a long and costly journey. Julie Lessard is a partner at BCF Business Law in Montreal. She can be reached at (514) 397-2260 or julie. lessard@bcf.ca. eXpaTRIaTes < pg. 15 Know local laws Operational support, control FRaNCHIse < pg. 5 Terminating an employee always involves costs, but the emotional and monetary expenses associated with terminating an expat can be far greater.

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