Sales Talent Agency was pleased to host a webinar to discuss various aspects of ‘cross-border hiring’ with two leading legal authorities on the subject. Below is a summary of the top 5 takeaways from the webinar and a link to the full video is also available here.
We were joined by two legal experts:
- Bonnie Puckett, who leads Ogletree’s Asia-Pacific practice and offers global companies business-practical cross-border guidance on all aspects of managing a global and internationally-mobile workforce, reconciling complex issues of multiple and conflicting laws and managing risk. Her regional focus spans Asia and beyond, with specialized expertise in jurisdictions such as China, Japan, Korea, Hong Kong, Singapore, India, Australia, Israel, and the UAE, as well as experience with matters in Europe and the Americas. Bonnie’s practice covers data privacy, employee mobility and expatriate strategy, restrictive covenants, international expansion, and alternative staffing structures. Recently, Bonnie has assisted global companies in managing pandemic response protocols.
- Stephen Shore, who is a skilled advocate whose practice is focused in many areas of employment and labour law. Stephen regularly writes for a variety of employment and labour law publications and speaks on his areas of expertise. Stephen is an Adjunct Lecturer, University of Toronto Faculty of Law, a member of the Ontario Bar Association Labour and Employment Section. He is also a member of the Canadian Bar Association, Ontario Bar Association (Labour & Employment, Civil Litigation, Constitutional, Civil Liberties, Human Rights, Pensions & Benefits, Insolvency, Young Lawyers), Advocates’ Society and Law Society of Upper Canada.
Takeaway 1: Things to consider when hiring someone in Canada
- It is very likely that when you hire someone in Canada, Canadian laws are going to apply. Whatever you are used to, depending on where your headquarters are, leave those assumptions aside and become acquainted with the relevant employment laws as they are quite different.
- Hiring Canadians presents a great opportunity for American employers: Canada has a very diverse workforce; Canadians are fluent in English but often speak other languages; Canadians are often highly educated; Canadians often meld really well into US business.
- From a financial perspective, it is approximately 30% less expensive to hire someone in Canada from a salary perspective, and there may be significant savings associated with employee healthcare costs which are majority covered in Canada.
Takeaway 2: The differences between hiring an independent contractor vs a full-time employee
The obvious benefits of hiring an independent contractor from an employer’s perspective is that there is less at stake i.e. you’re not paying benefits, workers compensation, etc. While this is the preferred method for many American businesses when engaging their very first hire, you have to ask yourself if you are hiring an employee who is 100% dedicated to your business, and if the answer is yes, they most probably are not considered a contractor. To put it simply, if your employee is deriving most of their income working for you and if you are also restricting them from working for other companies, those are the biggest signs that you have an employee, not a contractor. Other indicators can include that the individual has business cards with your company’s name on it, use of a company car, dealing on behalf of your company and/or representing themselves as a member of the team. A contractor can be seen as an employee later if you’re not careful, and there could be significant costs attached to it. Ultimately if it walks like a duck, quacks like a duck, then it’s an employee.
If you are hiring an independent contractor for market exploration purposes, it is recommended that you don’t do so past a year. By the 6 month mark, decide if you’re going to squash the project or hire the individual on full-time, at which time you’ll need to engage a payroll provide to ensure that you are compliant.
Takeaway 3: There is no at-will employment in Canada
At-will employment is a term used in U.S. labor law for contractual relationships in which an employee can be dismissed by an employer for any reason (that is, without having to establish “just cause” for termination) and without warning, as long as the reason is not illegal (e.g. firing because of the employee’s race, religion or sexuality). When an employee is acknowledged as being hired “at will,” courts deny the employee any claim for loss resulting from the dismissal.
The biggest piece of advice for an American employer is that if you are going to engage a Canadian employee, do not put “at-will” employment anywhere in a contract as it does not apply in Canada. You may want to consider engaging a Professional Employer Organization (PEO) for advice on how to set employee expectations. You want to ensure that you are doing your due diligence as it could cost you significantly down the line.
Takeaway 4: There are some cultural differences to be aware of
From an observational perspective only, Canadians tend to have a different relationship with authority. American employees tend to be more willing to accept chains of command where Canadians tend to need a sufficient reason to follow direction. Expect more ‘whys’ from Canadians. There is a theory that “at-will employment” and the lack of contractual agreements in the United States makes this so.
Because employment in the states is at-will, a big chunk of employment law falls under discrimation suits, the penalty at which can be very punitive. On the flip side in Canada, if you’ve been non-compliant, the penalty is often compliance. As such, lawsuits tend to be much bigger in the United States. In Canada, it is very rare that someone would receive millions of dollars from punitive damages.
Lastly, Canada is a social welfare state (the closest comparison in the US is California). Canadians have more protection for things like maternity/paternity leave, disability leaves, etc. Union laws are also more favourable for Canadians.
Takeaway 5: Pay attention to jurisdiction laws
The laws change country-to-country, province/state-by-province/state. Engage experts to become familiarized. Some examples include:
- In the United States, employment law is federal for the most part; in Canada employment law differs province-by-province
- In the United States, you are legally required to provide healthcare coverage; in Canada it is standard to top-up benefits for full-time professional employees, but the cost is significantly less due to universal health coverage
- In the United States, paid time off (PTO) is standard and encompasses everything from vacation time, paid sick leave, bereavement, etc.; in Canada, each of those buckets are treated separately
- In United States, because there is no contract, punitive damages are much more common; in Canada, because there is a contract, it tends to make things easier
If you are looking to familiarize yourself with specific provincial laws, Americans looking to hire Canadians tend to begin their exploration in the country’s most populous populations: British Columbia, Alberta, Ontario and sometimes Nova Scotia.
If you’re looking for a deeper dive, the full webinar can be found below.