Canadian HR Reporter

CanaDian hr reporter october 20, 2014 fEATUrEs 13 Staffing Temporary workers: A potential trap for employers A detailed look at the legal risks, pitfalls to consider By George Waggott I n the current economy, many employers are constrained for economic or organiza- tional reasons from hiring new employees. The result is the increasing use of temporary workers. Since the recession, temporary work has grown at more than tri- ple the rate of permanent employ- ment, with more than two million Canadians engaged annually as temporary workers, according to Statistics Canada. While temporary positions are most prevalent in the education, culture and the hospitality sec- tors, these arrangements are used across the economy in virtually every sector. Temporary work arrange- ments give employers a more flexible workforce; however, hir- ing these workers is not always the preferred solution and there are legal risks employers must consider. Many of the pitfalls as- sociated with temporary workers can be traced to commonly held misconceptions about who is and is not an "employee." Many of us have heard all too often the refrain that someone working "is not an employee, only contract." Others often make incorrect distinctions between "contract employees" and "regu- lar employees." ese approaches oversimplify the issues and ignore the legal obligations associated with being an employer. e law looks beyond self-serving labels used by organizations and consid- ers the substantive relationship, with a particular focus on control and integration. It's very important to carefully consider the legislative and com- mon law regime that prevails in the jurisdiction where the work is being performed. To properly assess the legal framework appli- cable to a worker, merely review- ing or drafting documents is not sufficient — there must also be a close review of applicable statutes and cases, together with relevant facts regarding the work actually being performed. Even in cases where a third- party agency either recruits or notionally employs temporary workers, the party receiving the benefit of the services does not automatically escape liability un- der workplace laws. In practice, temporary em- ployees are almost always cov- ered by some of the laws that apply to regular employees. is will generally include the relevant employer obligations with re- spect to employment standards rules, human rights protections, health and safety, and workers' compensation. While the concept of tempo- rary employment should in theo- ry involve work for a set period of time, many organizations engage temporary workers as an alterna- tive workforce. Some jurisdic- tions have attempted to address these issues and mitigate against perceived abuses of temporary agencies as a means to avoid legal obligations. For example, Ontario adopted detailed temporary help agencies rules in its Employment Standards Act in 2009. While the rules are complex, key changes to so-called "assign- ment employees" included an elimination of the finder's fee be- ing charged where an agency em- ployee has been working for the client company for more than six months, and clarification about the obligations to pay terminated employees their applicable statu- tory termination amounts. Even with legislated rules in place, temporary staffing agen- cies offer a number of benefits. If properly documented and admin- istered, an arrangement can be established where the temporary worker is employed by the staff- ing company and not the organi- zation receiving the benefit of the work. In a typical arrangement, the HR, payroll and discipline pro- cesses can also be handled by the agency. e client company can often benefit from the op- portunity to restrict the number of assigned hours and, in most cases, there will be a right to have the employees "returned" to the agency without further obligation. Many employers decide to forego a temporary agency and instead source and hire temporary workers directly. Perceived cost savings and available in-house recruiting and human resources expertise may be factors in sup- port of this approach. In this case, organizations should ensure any job postings or communications clearly indi- cate the position is temporary. Of equal importance, there should be a clear explanation of what the temporary position consists of, particularly in terms of the dura- tion of the assignment and what benefits or other entitlements the position does not provide. is should also be backed up by a clear offer letter or employ- ment agreement. In many cases, employers will attempt to avoid having to pro- vide benefits to workers based on calling them "temporary" or "contractors." ese labels are not determinative. Instead, any statu- tory benefit obligations will be based on the particular legislated benefits rules. Additionally, any company- provided benefits will be based on the applicable company rules, handbook or policies. Clear drafting and practices that are consistent with relevant documents are therefore crucial. Even if a worker is truly tem- porary, the employer will want to make sure the employee is prop- erly trained and oriented. is will be required both for risk-management purposes, such as minimizing the risk of dis- crimination or health and safety claims, and to ensure knowledge of and compliance with applicable policies. As with any worker, one of the key areas of potential dispute in- volves the right of the organiza- tion to terminate, and the relevant entitlements of the worker upon termination. In some cases, the courts have held that a series of terms contracts can transform the employer-employee relationship into an arrangement of indefinite duration. If this argument is successfully made out, the employer will be li- able for common law notice based on the entire period the worker provided services. One the most prudent ways to address the point is to stipulate and obtain worker agreement that rights arising upon termina- tion will be limited to legislated amounts. With our economy and mod- ern workforces continuing to transform, the increasing use of temporary work is almost cer- tainly going to continue. The result is that organizations will need to ensure they pay close at- tention to the legal pitfalls arising in this area and address legal risks responsibly. George Waggott is a Toronto-based management employment lawyer at the law firm McMillan. He can be reached at (416) 307-4221, george. waggott@mcmillan.ca or, for more information, visit www.mcmillan.ca. Even if a worker is truly temporary, the employer will want to make sure the employee is properly trained and oriented. NiagaraInstitute.com conferenceboard.ca Tools for Leadership Success Niagara Institute Leadership Training • Publications • Webinars COMPENSATION (416) 498-7800 ext. 1 www.resourcecorporation.com Compensation Surveys Incentive Programs Job Descriptions Job Evaluation Pay Equity Performance Appraisal Salary Administration Sales Compensation CONSULTING the process of collective bargain- ing, and irrespective of the per- sonal circumstances of individual employees (and entirely unrelat- ed to the protected attributes in the Human Rights Code)." Regular employees and LTD employees should not be com- parable — one group consisted of regular contributors to the company who could continue to work as long as they wished and the other didn't work and likely wouldn't again, said the arbitra- tor. For the purposes of deter- mining discrimination, a proper comparator group would be oth- er long-service employees who were away on leaves of absence. Since an employee who had been on leave who volunteered for the VSP would receive a payment calculated by what she earned when last at work, the compara- tor group was treated the same. e arbitrator ruled the buy- out formula in the Labatt VSP was not discriminatory and not based on an unwarranted preju- dice against employees not work- ing and receiving LTD benefits. "I am not persuaded that it was unlawfully discriminatory to pay the potential takers in relation to the price paid for the work last performed — at least where, as here, the escalation of rates which produces the discrepancy, occurred in the ordinary course of bargaining and had nothing to do with the claimants' disability," said the arbitrator. For more information see: • Labatt Breweries Ontario and SEIU, Local 2 (voluntary sever- ance program), Re, 2014 Car- swellOnt 11888 (Ont. Arb.). Jeffrey R. Smith is the editor of Cana- dian Employment Law Today, a pub- lication that looks at workplace law from a business perspective. For more information, visit www.employment- lawtoday.com. No prejudice lAbATT's < pg. 5

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