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Managing the Workforce: Employment Agreements
This article was originally written for and published by Country Guide.
The days of a one-parcel, 100 acre family farm are long past. As farm operations become larger and more sophisticated, so does the need for properly managing farm operations. And that starts with the workforce.
Obviously, proper training, supervision, and safety policies and procedures are paramount when it comes to managing a workforce. However, the importance of proper Employment Agreements cannot be understated.
There are three main reasons to have Employment Agreements for all of your farm workers:
- Reducing termination costs;
- Compliance with employment standards; and
- Protecting confidential information and intellectual property.
Reducing Termination Costs
One of the most important reasons for entering into Employment Agreements with any employee is the potential for reducing termination costs.
In many Canadian jurisdictions, there are actually two levels of potential termination costs: the statutory minimum entitlements and the common law entitlements.
Depending on a number of factors (such as the type of employee, length of employment, the reason for termination, and province), the statutory minimum entitlement for a terminated employee can be equal to a couple of months (or more) of salary plus benefits.
While that is undoubtedly a significant potential liability for an employer, it’s minuscule compared to the potential risk posed by common law entitlements. In the right circumstances the common law entitlement of a terminated employee can be upwards to two years of salary plus benefits!
The best way to protect yourself from the risk of being required to pay common law notice is to enter into valid, enforceable Employment Agreements with each and every employee, with properly drafted termination provisions that contract down from common law entitlements to the statutory minimums.
Properly drafted Employment Agreements have the potential of saving your farm hundreds of thousands of dollars in termination costs. For this reason alone, all farms should have proper Employment Agreements with all of their employees.
Compliance With Employment Standards
Most, if not all, farm workers in Canada (including foreign workers) are protected by some form of employment standards legislation. However, the rules (even within the same province) do not apply equally between different categories of farm employees.
There are, generally, four type of agricultural workers in Canada: (i) general farm employees, (ii) harvesters, (iii) “near farmers”, and (iv) landscape gardeners.
In the event that an employee’s usual work falls into more than one category, the way that they spend the majority of their work time will determine which category, and therefore which rules and standards, apply to them.
This means that different workers on the same farm could fall into different categories, and be subject to difference employment standards, rules, and entitlements.
Even though Employment Agreements are not required in order to comply with employment standards, having proper Employment Agreements can be useful for specifying the tasks of each employee, which can help with correctly categorizing your employees, and applying the proper employment standards and rules.
Protecting Confidential Information and Intellectual Property
Not all provinces in Canada allow employers to enter into non-competition contracts with all of their employees, but Employment Agreements are useful for protecting confidential information and intellectual property.
The protection of trade secrets, inventions, and confidential plans and procedures can be vital to the continued success of any business.
Generally speaking, the common law provides very little protection from a former employee (even a temporary one) using the information and procedures learned on a farm of a former employer to compete against that employer. However, even in jurisdictions that prevent employers from entering into non-competition agreements with their employees, employers can still use properly drafted confidentiality and intellectual property agreements (either as stand-alone documents or as part of an Employment Agreement) to protect its most valuable information from being exploited against them.
A Word of Warning
Although it should be clear, at this stage, that entering into Employment Agreements with each of your farm employees should be at the top of every farm’s “to-do” list, caution is needed when entering into Employment Agreements.
Canadian Courts have, in recent years, typically taken a very broad and protective stance when interpreting employment standards legislation. In doing so, the Courts are very strict in requiring Employment Agreements to comply with the technical wording of the relevant employment standards legislation, and will (often without hesitation) find an Employment Agreement to be either completely or partially unenforceable.
In particular, extreme caution is needed with respect to termination clauses, as any misstep in one termination provision within an Employment Agreement can cause disaster. Failing to comply with the minimum standards for termination entitlements in any one provision of an Employment Agreement could invalidate every termination provisions in that Employment Agreement, potentially costing your farm tens of thousands of dollars (or more)!
As a result, an experienced employment lawyer should always be consulted when preparing and entering into Employment Agreements.
The Bottom Line
Engaging qualified employment lawyers to assist with drafting and entering into Employment Agreements for each of your employees should be at the top of every farms “to-do” list.
This article was written by Business, Agri-Business, and Succession Planning Lawyer Todd Devitt, and was originally written for and published by Country Guide.
