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By KS Business Group, January 30, 2012 1:27 pm

While businesses enter 2012 hoping for the best, many are conscious of the fact that the world’s economy is on shaky ground and a repeat of the difficult days of 2008 is possible.   Should we see a repeat of that difficult time, many employers may have to downsize.

If there is a shortage of work, the Employment Standards Act allows employers to lay off employees for not more than 13 weeks in a 20 week period, in most cases.   However, the right to lay off an employee must be specified in the employment contract.   If layoffs are not a viable option, employers will need to let employees go through ‘termination without cause’.  When this occurs, employers must meet the minimum obligations to employees as set out in the Employment Standards Act.  Depending on the circumstances, employers may also be liable for other ‘common law’ obligations.

The Employment Standards Act dictates that employees being terminated without cause are entitled to all accrued wages, vacation pay and other entitlements such as pension contributions or health insurance.  In addition, the Employment Standards Act stipulates the minimum amount to be paid to an employee in lieu of notice when a termination occurs.  All employees with a minimum of three months service are entitled to termination pay of one week pay per year of service, up to eight weeks pay.  Employee benefits must continue to be paid during this time period and employees will also continue to accrue vacation pay.   If your company payroll is greater than $2.5million and the employee has 5 or more years of service you will also have to provide severance pay.  This entitles the employee to one week pay per year of service, up to a maximum of 26 weeks.

In addition to the minimum standards required by the Employment Standards Act, some employees may be entitled to additional ‘common law’ benefits, depending on their circumstance and the terms of their employment contract.   The main factors that may contribute to additional entitlements are the employee’s length of service, age, the availability of similar employment and the character of employment.  For example, a 60 year old senior vice-president with a lengthy service to the company who is let go during a recession could receive up to two years of pay in lieu of notice.  All of this is subject to an employee’s duty to mitigate, which means the employee must actively seek out and accept reasonably similar employment.

J.P. Zubec

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By KS Business Group, January 27, 2012 10:58 am

One possible outcome of a unstable economy in 2012 is a rise in the number of people taking the plunge and going into business for themselves.  Using the proceeds from their severance packages, many people will start their own business by investing in a franchise.  Anybody taking the initial steps into franchise ownership should be sure to invest time learning how to properly assess which franchise is right for them.  To get started, potential franchise owners should take a look at The Canadian Franchise Association list of 10 questions to ask potential franchisors.

While some people may be considering starting their own business by investing in a franchise, others will be looking to start their own small business.  For these individuals there are many important decisions to make about how to legally structure the business.  Taking the time at the outset will provide short and long term flexibility to help minimize tax obligations, attract and reward staff and guide decision making procedures amongst business partners.  Examples of some of the key issues which anyone starting a new business, including home based sole proprietors, should be considering include:

• The pros and cons of different business structures.  For example, purchasers of many services require that their independent consultants be incorporated as a way of demonstrating that the worker could not be considered an employee for tax purposes.
• Understanding the benefits of creating different classes of shares when establishing a company.   For a family business these different classes of shares could allow you to pay children using dividends without providing them any voting shares.
• The essential provisions of a shareholders’ agreement.  A well structured shareholders agreement between business partners will cover important issues such as remuneration, decision making, sourcing of capital and dispute resolution.

To learn more about the legal considerations when starting a small business, join us for a free webinar on March 6^th.  You can register by clicking here.

Andy Scott

Mike D’Aloisio

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By KS Business Group, January 25, 2012 9:34 am

With the global economy entering another year of uncertainty, business owners should be taking steps to ensure assets they have worked hard to generate over the years remain as secure as possible.  Many successful businesses have made significant reinvestment within their operating corporation.  By restructuring their corporation, reinvested assets can be removed from the operating company and then loaned back in a secure manner.   This process will ensure that the assets are secured ahead of other creditors should the business experience any financial difficulty or even bankruptcy during an unexpected downturn.

J.P. McAvoy

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By KS Business Group, January 23, 2012 10:38 am

In last year’s Business Issues 2011’ report we emphasised the need for employers of all sizes to implement social media policies.  In 2011 the need for these policies was emphasized through several high profile cases.  Many businesses are investing considerable resources to build their corporate presence in social media, often through messages created by dozens or more employees.  But, as Kenneth Cole found out with the infamous tweet about the uprisings in Cairo (#7 on the Huffington Post’s top PR blunders of 2011), an inappropriate message can quickly go viral and cause significant damage.

Now that social media has been an active part of the communication tools used by business for a few years, there are some new legal disputes arising.  Courts in the US are looking at two separate cases involving former employees and ownership of social media contacts.  In the first case, the dispute is over the ownership of LinkedIn contacts (Wall Street Journal Law Blog) and the second is over ‘ownership’ of the company’s 17,000 followers on Twitter (NY Times coverage).

In addition to the potential damage to a business’s reputation and disputes over ownership of social media, there is the always the potential damage that can occur through an employee’s inappropriate use of their personal social media pages.   In 2011, the courts began to see more cases involving disputes involving employees who were fired because of comments they made about their employers on Facebook and other social media sites.

Each employer’s circumstances are different and there are no set rules that can completely prevent these types of problems and disputes from occurring.  However, employers who do not have a well thought out social media policy in place for social media use by employees should take the steps necessary to create and communicate the policy to their staff to help prevent problems from arising.

Richard Sinclair

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By KS Business Group, January 18, 2012 10:04 am

With one in seven people in Ontario having a disability, the Province of Ontario is requiring that workplaces are accessible to everyone. The Accessibility for Ontarians with Disabilities Act, 2005 creates province-wide accessibility standards to improve accessibility by identifying, breaking down and preventing barriers to accessibility. The Accessible Customer Service standards under the Accessibility for Ontarians with Disabilities Act, 2005 (AODA) are mandatory for all Ontario businesses and organizations with one or more employees that provide goods or services directly to the public. They came into effect on January 1, 2012.

If organizations are non-compliant, the Ministry of Community and Social Services (MCSS) will use enforcement tools to achieve compliance. If compliance assistance efforts are not successful, organizations that are not compliant may be issued an administrative penalty. The current proposed range of penalties is from $200 to $155,000.

The MCSS has numerous tools online to assist organizations.

Organizations that have less than 20 employees are required to:

1. Create your plan
2. Train your staff

To create your place, a guide is available including a template. Tools are available online for organizations with less than 20 employees to assist with staff training.

Organizations with 20 or more employees are required to:

1. Create your plan
2. Train your staff and keep a training log
3. Put it on paper and ensure your customers know it’s available
4. Inform the Ministry of Community and Social Services of your compliance efforts via their website. Organizations have until December 31, 2012 to file your report. The Ministry will make this available as of January 1, 2012.

Tools are available online to assist organizations with 20 or more employees create a plan and train staff. A checklist is also available.

There are many methods to become compliant with the AODA. Regardless of the chosen method, it is important that all organizations take the time to become compliant and avoid potential fines.

On February 15^th, Kelly Santini LLP will be hosting a webinar to outline the steps each employer must take to ensure compliance with the new law.  For more information or to register, please click here.

Andrew Christie
Student-at-Law

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By KS Business Group, January 16, 2012 10:19 am

It’s expected that the Ontario Not-For-Profit Corporations Act, 2010 (NFPCA), which received Royal Assent on October 25, 2010, will finally come into force in late 2012. Once in force, the NFPCA will replace the Corporations Act (Ontario), which currently regulates not-for-profit corporations in Ontario.

The NFPCA will provide a regulatory framework similar to what is currently available to Ontario “for-profit” corporations and largely mirrors the recent changes to federal not-for-profit corporations which were implemented in the Canada Not-For-Profit Corporations Act, which came into force on October 17, 2011.

In the coming months, we expect that the provincial government will begin to release draft documents and transition guides to assist in the continuance of current not-for-profit corporations. Corporations can now begin familiarizing themselves with the new legislation and start planning their continuance under the NFPCA.  More information on the Ontario Not-For-Profit Corporations Act, 2010 is available here.

For federally incorporated not-for-profits, 2012 will be a year when boards begin to plan for the changes required by October 2014.  For a short summary of the changes brought in by the new legislation and the steps boards should be taking to comply, please click here.

Michael Leaver

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By KS Business Group, January 13, 2012 10:01 am

The coming year may give many business owners a hefty sense of déjà-vu as the world economy shows renewed signs of strain and banks, particularly in Europe, face potential liquidity problems.  On a more positive note, the Bank of Canada is unlikely to raise interest rates and businesses will not have to brace for the double impact of a slowing economy and higher borrowing costs.

However, the slowing economy will impact the bottom line of many businesses and with it, their ability to repay creditors.   While the natural temptation in these circumstances is to avoid the problem, business owners who take a proactive approach to working with their lenders can greatly improve their circumstances.   Being vigilant with regards to outstanding accounts receivables, and understanding the terms of loan facilities with a view towards possible renegotiation, can help ensure access to capital if liquidity problems occur in the financial system.

Rick Brooks

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By KS Business Group, January 11, 2012 11:32 am

Welcome to 2012 and to the launch of Kelly Santini LLP’s new business law blog – StartUp. BuildUp. SellUp.  This blog has been created to provide business owners, entrepreneurs and managers with helpful and insightful guidance on issues which could affect or help their business in the months and years to come.

To launch the blog we will be publishing our ‘Business Issues 2012’ forecast which identifies a number of challenges and opportunities business may face over the coming twelve months.  Businesses everywhere start this year facing a volatile market as pessimism rises and business and consumer confidence in Canada falls in response to global events.  Many of the items selected for our ‘Business Issues 2012’ forecast reflect this prevailing sentiment.  We hope they help businesses and business owners navigate through the next year.  Topics we’ll cover in the coming weeks include:

1. Solidify Relationship with Lenders
2. Legislative changes coming for Not-for-profits
3. Securing retained profits within a business
4. Changes in Franchising Legislation across Canada
5. Requirements of the new Ontario Customer Accessibility Legislation
6. A reprieve for the construction industry on WSIB claims
7. The rising for workplace social media policies
8. Managing layoffs
9. Business opportunities for new entrepreneurs

We welcome your feedback on the 2012 forecast and the other blog posts as they come on-line.  If there are topics you would like addressed in the future posts, please get in touch.

Kelly Sample