Tag Archives: Labor Law

Global HR Issues That Keep Executives Up at Night – Part 2


Guest Author:
Jacqueline Vilet – TriNet

Editor’s NoteWe are pleased to welcome Jacque Vilet as a guest author for the International HR Forum. Jacque is a Global HR/Benefits Consultant for TriNet, providing global Human Resources services to SME’s with international operations.  She has over 20 years experience in International Human Resources with both local nationals and expatriates, and has been an expat twice during her career. Jacque holds the Certified Compensation Professional (CCP) designation from WorldatWork, and the GPHR (Global Professional in Human Resources) designation from the Society of Human Resources Management.

In Part 1 of “What Keeps Executives Up at Night”, we talked about the importance of employment contracts and how requirements vary from one country to another.  But employment contracts are only one of the major labor issues that companies face when doing international business.   Terminating local national employees can also create major problems.

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It’s the World Cup — Do I Have to Work?


Author:

Mariana Villa da Costa – Littler Mendelson

On June 11, the world has seen the launch of one of the biggest sporting events – the World Cup, this year being hosted in South Africa.  The World Cup is a passion to millions and millions of people around the world, and a much anticipated month-long series of games that unfortunately, for those who love futbol (soccer)  like me, only happens once every 4 years.

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Global HR Issues That Keep Executives Up at Night – Part 1


Guest Author:
Jacqueline Vilet – TriNet

Editor’s NoteWe are pleased to welcome Jacque Vilet as a guest author for the International HR Forum. Jacque is a Global HR/Benefits Consultant for TriNet, providing global Human Resources services to SME’s with international operations.  She has over 20 years experience in International Human Resources with both local nationals and expatriates, and has been an expat twice during her career. Jacque holds the Certified Compensation Professional (CCP) designation from World at Work, and the GPHR (Global Professional in Human Resources) designation from the Society of Human Resources Management.

Everyone has heard the question “What keeps you up at night?”   The answer usually depends on the context.   If we ask  C-level executives, the answer might cover such topics as market share, profit margins, stock price, ROI, etc.

Executives might also worry about their international operations – whether they picked the right people to run them, whether these managers are making inroads into the company’s potential customer base, hiring the right employees and remaining on target to meet business goals that are so important for expanding the company’s global market.

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International Employment Law “Quick Facts”: India


Author:
Mariana Villa da Costa – Littler Mendelson

Hello Readers! Sorry about the radio silence, but I am back with another edition of our  “International Employment Law Quick Facts”! Based on our readers requests, I have chosen India for the next in this series.

India is a place of exotic food, beautiful architecture and Bollywood! But, it’s also a developing country with the world’s second largest labor force and an economy that is taking over many others, and becoming one of the best places for global companies to invest. One important observation – Indian Labour and Employment Law is among one of the most complex in the world, so while I know the outline that follows is a good start, it is always a great idea to consult a lawyer.

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Independent Contractor or Employee?


Author:
Mariana Villa da Costa – Littler Mendelson

There are many situations when companies consider hiring “independent contractors” rather than direct employees.  When considering such a step in an overseas market, each country’s labor law should be consulted to determine the specific requirements of independent contractors in that country.  Here are some issues to consider that are commonly addressed by most country labor laws.

Independent Contractor or Employee?
The difference between an employee and an independent contractor is determined based on the requirements that one must have to be an employee.  While each country is different, generally, an individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and when there is no exclusivity in the relationship between the parties.

5 Questions to Assess Independent Contractor Status

Here are 5 questions to help you determine if a relationship is a true independent contractor:

  1. A worker is an employee if the company has the right to control the manner and means of accomplishing the result desired.
  2. An employee is paid for his/her time and bears no risk of wage loss if the employer’s product is unprofitable.  An independent contractor has the opportunity to profit from the project and the risk of loss, depending on the worker’s managerial skill.
  3. An employee is not required to invest in the employer’s business.  An independent contractor makes some investment in tools, equipment, supplies, and facilities appropriate for his/her business.
  4. An employee may receive training.  An independent contractor has the skills necessary to perform the task without additional training.
  5. An employee enjoys a continuing relationship with the employer.  An independent contractor generally works on one project and moves on, accepting additional projects when and if available.

Key Considerations for Independent Contractors

Before engaging an independent contractor, be sure to consider the following:

  1. Determine the real need to have an independent contractor.  Could this work be done by an employee instead?
  2. Draft an independent contractor agreement that makes the case for real independence. Prepare a very clear and specific agreement.  Address all possible issues and avoid having the contractor sign non-compete restrictions.  Avoid mention of bonuses or other provisions, such as  vacation, work hours and other stipulations that look like employment terms, in the independent contractor agreement.
  3. Structure the day-to-day working relationship to support the contractor’s independence. For example:
    1. Do not put the contractor in the employment list or in the payroll and keep the contractor off organization charts.
    2. Do not provide an office or company business cards and do not schedule hours.
    3. Avoid constant email with requests that are more closely to control than simply guidelines on how the company wants a final product to be delivered.
    4. Do not pay the same amount every month.
    5. Ask the contractor to invoice the company with detailed information on hours worked and project deliverables to justify payment.

Additional Tests to Assess Independent Contractor Status

This checklist is based on the one developed by the US Internal Revenue Service (IRS).  It gives valuable information that characterizes most independent contractor relationships across the globe:

  • No instructions
  • No training
  • Services do not have to be rendered personally
  • Set own work hours
  • Not a continuing relationship
  • Control their assistants
  • No interim reports
  • Paid by job
  • Time to pursue other work
  • Decide on job location
  • Order of work set
  • Work for multiple companies
  • Pay business expenses
  • Have own tools or equipment
  • Significant investment in their business
  • Offer services to general public
  • Can make entrepreneurial profit or loss
  • Cannot be fired at will
  • No compensation for non-completion

Maintaining the proper classification of employees versus contractors is very important to ensure compliance with labor law regulations.  The rules are unique to each country, and HR professionals are urged to review the specific requirements for each country as needed.

Important Note: These guidelines are intended to provide a brief overview of the independent contractor issues in foreign countries.  It is not intended as a substitute for professional legal advice and counsel.

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Littler Mendelson

International Employment Law “Quick Facts”: Canada

Author:
Mariana Villa da Costa – Littler Mendelson

Hello Readers! The first edition of our “International Employment Law Quick Facts” was a success! Many readers commented on the article and asked me to prepare profiles for other countries.  Again, please feel free to add a comment, or send me a note to let me know what you think about this post.  We will try to publish additional installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A. Before going into our definitions it is important to note that in Canada, the employment practices of most employers are provincially regulated, whereas federal jurisdiction is limited to employers that deal with national infrastructure, for example, banking, railways, and airlines.  Since each jurisdiction in Canada has specific legislation, it is important to become familiar with the local specifics before engaging in any labor and employment matters.

In Canada, the statutes that confer rights and obligations to employees and employers usually contain definitions. The Ontario Employment Standards Act has a good definition of Employees:

  • a person, including an officer of a corporation, who performs work for an employer for payment (wages);
  • a person who supplies services to an employer for wages;
  • a person who receives training from a person who is an employer, and
  • a person who works from home  for an employer.

Employer, on the other hand, is an owner, proprietor, manager, superintendent, receiver or trustee of an activity, business, work, trade, occupation, profession, project or undertaking who has control or direction of, or is directly or indirectly responsible for, the employment of a person on it.

Although there is no precise definition of the term “independent contractor” the idea is always of direction and control.  An employer is entitled to direct and control how and when the work is performed.  An independent contractor is left to determine how to perform the services for the client; the firm that retains the independent contractor  can only specify the product and result of the independent contractor’s work.

Q. Is it necessary to have written employment contracts in Canada?

A. In Canada there is no need to have a written employment contract.  A contract of employment will exist if it was agreed, either orally or in writing. However, written contracts are not customary, unless it is for executive positions, or if employees are hired for a fixed term or task.

The main reason for having a contract for executives is to clarify and address the severance package.  On the other hand, the need to have them in place for employees hired for a fixed term or task is to avoid the statutory obligation to give notice of termination.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Canada, if there is no specified term, the contract will be presumed to be for an indefinite term. However, parties to an employment relationship can agree on employment for a fixed term.  In this case, the employer will not have to dismiss the employee and give reasonable notice.

It is important to note that if the fixed term of a contract expires and the employee continues to work without entering into a new fixed term agreement, it is understood that the contract becomes for an indefinite term.

Q. Are there any rules in regards to discrimination in employment?

A. Canada has very serious regulations in terms of human rights and discrimination; this is prohibited in various grounds.

The Canadian Charter of Rights and Freedoms sets a constitutional standard that all governments must follow — federal and provincial. The Charter states that every individual is equal before and under the law and has the right to equal protection. However, this Charter cannot be directly used by an employee against the employer; in those cases, the individual must rely on human rights statutes to challenge discrimination on employment terms and decisions.

The Ontario Human Rights Code is an example which defines that discrimination is prohibited in the areas of employment, accommodations, services, facilities and signage. It protects employees from discrimination on the grounds of race, place of origin, ancestry, race, ethnic origin, citizenship, creed, gender, sexual orientation, age, marital and family status, disability, and also addresses sexual harassment.

Q. What are the rules regarding working hours?

A. Different employment statutes in Canada define the work day and work week.  In most provinces, the standard work day is eight hours, but the standard work week varies in different provinces – the low is 40 hours per week, for example in British Columbia, and the high is 48 hours per week (Ontario) .

It is also important to note that most employees who perform supervisory and management functions are excluded from standard hours regulations.

Q. Are there any minimum wage requirements in Canada?

A. In Canada, an employer is obligated to pay employees wages of at least the minimum established in the jurisdiction of employment. In some cases and in some jurisdictions, employers do not need to pay minimum wage, for example, students who work in Ontario.

Q. What are the rules regarding the termination of employment?

A. In Canada the employment relationship can only be terminated for:

(i) Just Cause – When the employee engages in serious misconduct, e.g., disobedience, unlawful or dishonest conduct, violence, subordination, etc.  In this case, the employee is not entitled to any compensation beyond salary up to the day of termination.

(ii) Without Cause – Employer does not need any motive to terminate employee, however, reasonable notice or pay in lieu of notice must be provided.

Q. What should an employer know about benefits and social security in Canada?

A. Canada has an extensive social security system covering pensions and social welfare benefits, which provide coverage for almost the whole population.  Responsibility for the planning, management and delivery of social security programs is shared between the federal and provincial governments.

The universal pension system is state-funded, while employees, employers and the self-employed must contribute to the earnings related pension scheme and the employment-related benefits scheme, which covers sickness and maternity pay, unemployment benefits and other welfare assistance.

The only benefits that employers need to provide to employees are those related to the mandatory statutory social security programs, such as:

  • The Canada Pension Plan (CPP) for residents outside the province of Quebec and the Quebec Pension Plan for the residents. The CPP is a national social security program mandatory for all employers.
  • Federal employment insurance – a mandatory contribution that fund income frpm loss of employment, maternity, parental and sickness benefits.
  • Provincial worker’s compensation regimes – maintained in each province –  provide benefits in case of workplace injuries.
  • Provincial health and hospital insurance plans – provide for basic medical assistance and essential hospital care.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Canada.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Canada.  It is not intended as a substitute for professional legal advice and counsel.

More About Mariana

Mariana Villa da Costa

Mariana on LinkedIn

Email Mariana

Littler Mendelson