Careers in the Cloud – E38: Go From Solo IT Contractor to Employer

In this episode, we are joined by Emily Kroboth, Associate at Dentons Canada LLP, who specializes in Employment & Labour Law. Emily shares her expertise on how IT contractors can evolve into successful employers. From navigating complex employment regulations to understanding taxes and compliance, Emily provides clear, actionable advice for cloud and tech professionals ready to scale.

You’ll learn how to handle hiring, protect your business legally, and grow confidently without falling into the common traps that catch many first-time employers.

Ideal for IT contractors, cloud consultants, and independent tech professionals looking to take the next step in their careers.

Watch the full episode and discover how to scale your contracting business the smart way.

Read the transcript:

Please note, that this transcript is automated and may have errors

[00:00:00,040] Maurizio:

Today we'll be discussing general legal topics, none of which constitute actual legal advice and are meant for informational purposes only. 

So it's a natural progression for a lot of IT contractors. They start their career however old they are, and they start working these IT contracts, as you could say, a solopreneur, right? They're incorporated. They're their only employee. As time goes on, they get more successful, they win more clients. They have a bit of a bigger network. What often happens is they start to look at, okay, how can I how can I get some help? That's actually how it really starts, right? Um, a lot of them don't know how much you have to consider before you hire someone, even if it is someone junior, depending on where you want them to be, depending on where your business is registered, there's a whole bunch of things there that are overlooked, you could say, and I'm sure you'd probably know better than me, but today we're going to be having a pretty open conversation for those types of contractors where you've slightly more established, perhaps, than you were a few years back, and you're ready to start hiring some help for your business. So thanks for joining us today. 

[00:01:12,540] Emily:

It's good to see you again. Yeah, nice to see you. 

[00:01:14,740] Maurizio:

Yeah. 

[00:01:15,100] Emily:

Long time. 

[00:01:15,820] Maurizio:

Yeah. So maybe to to start, for those who don't know you give us a little bit of information on your background, what you do today, and what your focuses are. 

[00:01:25,780] Emily:

Yeah, absolutely. Um, so I'm an associate at a global law firm, and I focus on employment and occupational health and safety laws. to comply with certain laws like the Employment Standards Act, Occupational Health and Safety Act, the Ontario Human Rights Code. Um, so really it's everything from day to day legal advice to defense work as well in the event our clients are involved in a lawsuit. So high level, that's what I do right now. 

[00:02:00,080] Maurizio:

So with with your experience to to highlight a couple of things. You work with big and small companies. 

[00:02:05,920] Emily:

Yeah. Big guys and the little. 

[00:02:07,040] Maurizio:

Guys, big guys and the little guys and do a lot of is it the same problems they have just simply at scale, or are there things that you see more with smaller businesses that maybe would be more relevant for today that you know, in a company of this size, you'll never see, for example, this problem at fortune 500, whatever. 

[00:02:24,830] Emily:

Um, some of the problems are the same. I think the main difference is when you're a larger established company, you have things like HR departments. Gotcha. You have a lot of people on payroll who can kind of manage things as they come up. And you have established systems to help manage employees. You have people in charge of policies and in charge of hiring, firing, that kind of thing. When you are just starting out, your baseline knowledge of employment law and things you could consider might be zero. Um, generally, you know, if it's just you starting out as one of these contractors. You don't have a ton of help who can manage different things. So I would say similar issues exist. Um, regardless of the size of the company, it's just the resources that are available to help with those issues. Um, and those day to day management practices as they come up. 

[00:03:17,340] Maurizio:

Gotcha. Okay. So this is kind of a nice contrast, actually, to start because just because I'm a small business and I'm hiring someone who it doesn't matter the level, it could be someone fresh out of school technically because there's no infrastructure, right. Like you would have at a big company in some ways. Would you say there's more risk for the small guy? 

[00:03:43,260] Emily:

I mean, I think it depends on the help you get at the outset. So if your first step is to just kind of draft up a contract that says your start date is this day, this is generally what you'll do. Let's go then. Yeah. That's going to come with some liability because, I always say when I work with people who are just starting out, like your focus should be on the business that you're building. But in order to help build that business, you need to set the foundation. And part of that foundation is your hiring and employment practices. So, just starting out with, you know, a very, very brief, contract, or maybe a one pager that doesn't consider some of the things that you maybe should consider. Um, isn't setting a very good foundation. And while there may not be issues immediately, as you do continue to grow and scale, those issues could compound as you're kind of building the foundation into the, the walls of your business that you're building. So, you know, I think it's important to start off with at least, a base level understanding of, you know, what your obligations are with respect to hours of work. Over time, what people are entitled to upon termination. These are all things that are going to be very helpful in terms of making sure, one, that you're compliant with the law, and two, everyone's on the same page with respect to expectations. Um, so those are some some things to consider for sure. Okay. 

[00:05:18,090] Maurizio:

So no, no one who's I will say untrained is going to know that out of the gate. So that kind of answers my next question. Where is it important when you're starting out, such as the example that I, that I said to speak to an employment lawyer? Um, so the answer is obviously yes. Yes. 

[00:05:34,090] Emily:

Definitely. 

[00:05:34,730] Maurizio:

And how does someone go about doing that? Like if I'm a small business, right. And I'm speaking to Emily. Emily works at pretty well-known big law firm. Right. Is that the type of partner I should be considering, or is that a bit too big for my boots? And maybe I should look at a smaller one, like, is that how that works? 

[00:05:52,810] Emily:

I mean, it depends on what you're looking for. So a lot of firms, including mine, have something called a venture program, which is more geared towards smaller employers and businesses as. They're. Just starting up. So that is going to be something that is maybe more accessible to people who are starting up with smaller budgets. There are, of course, you know, solo practitioners and midsize law firms. So it doesn't necessarily matter which route you go, as long as you're getting the advice that you need as you're starting out. And what that advice looks like is, okay, so what is an enforceable, employment agreement? What do I need to consider, with respect to hours of work, overtime laws? Um, and what's helpful in getting advice about that is one, you'll have an understanding as you're getting started and two, you're not going to have an unenforceable, employment agreement, which you're then trying to rely on later in case there is an issue and maybe litigation does happen. You know, I always say things are good while they're good, but they may not necessarily. 

[00:07:03,330] Maurizio:

As soon as they're not. 

[00:07:04,170] Emily:

Yeah. Stay that way. Like I think a lot of times people start things off with like a handshake deal. And again, things are good while they're good. But it's important to have things flushed out in a contract. And so an employment lawyer can help you with that. Um, the other thing is there are some policies that are required, depending on the number of employees you have. So as your business continues to grow and scale, you might not need any policies as you're starting out with one employee. But as you continue to grow and maybe you're hiring more and more employees over the years, your legal requirements are going to grow from there. With respect to the types of policies you need to have place in place. 

[00:07:46,380] Maurizio:

So it's more efficient to scale. Like if you're thinking, you know, you only want one person, maybe all you need is, you know, something small to start, right? As long as it fits what you need for that one person. You're only looking for an assistant. But if you're really thinking to turn your tech contracting business into something that is more at scale consulting, which absolutely can happen, it's happened. We've seen it, right? That's where something like what you just mentioned, like a venture program where they can show you how to build the foundation, like you said in the beginning, so that it becomes scalable. That's probably  more cost effective in the long run. 

[00:08:20,430] Emily:

Absolutely. And even if you are just starting off with hiring one person, depending on how much revenue the business is bringing in, if you're ever in a position where you maybe need to terminate that person's employment, that could be, you know, a decent amount of liability if you don't have something like an enforceable termination clause. So even if you're small and the plan is to stay small, it's still in your best interest to help minimize that potential liability. Um, as you are, you know, trying to run whatever size business it is. 

[00:08:53,190] Maurizio:

Gotcha. So in your, let's say, in that first meeting with, I'm sure they're different, but there's some things that you're going to want to touch on. So enforceable, enforceable termination clauses is something that you obviously just want to have straight, because it also probably sets the expectation better for the employee too. 

[00:09:08,210] Emily:

So the courts don't view employment agreements as standard commercial agreements. The courts have recognized an imbalance in bargaining power between an employer and an employee. 

[00:09:19,210] Maurizio:

Okay. 

[00:09:19,690] Emily:

Um, so whenever or if you get to a point where a court is analyzing your employment agreement,  it's going to be read more. So in favor of the employee than the employer because of that imbalance of bargaining power. Um, so when you're starting out, you might think that, you know, we can just agree that if I don't need them anymore, I'll give them one week notice. Exactly. You have to one meet the minimum requirements of the Employment Standards Act, right? Which is roughly one week of notice per year of service in Ontario. Other things, like statutory severance, can come into play typically once you're much, much larger. But still things to be aware of as you're growing. Yeah. Um, and so you might think that, you know, you have a very basic agreement or a handshake deal. Um, but in reality,  there's going to be a much tougher lens applied to those types of agreements. So it's important to understand not only the minimum standards of the law, but also best practices  in terms of how to draft those agreements and make sure everything is, is clear. 

[00:10:31,580] Maurizio:

Okay. So this is, I might sound not too smart when I say this because I don't fully understand, but there's a couple things that I've seen where. So, this is more like the independent contractors agreement when they have it with their client right there. Some, issues that I've seen contractors talk to me about, and I obviously have to tell them you've got to talk to lawyer, because I can answer this for you. But it's almost like the agreement that their company has with their client. So the client they have has issued this contract to them, to their corporation. It's almost employment ish, but it's a B2B contract. Do you ever run into that or have you seen that before? Where, again, people can write whatever they want technically in a contract, but what's enforceable and what's not, what's within the limits of, say, Ontario law and what's probably outside. Do you see? Um, because you're saying that you see you see some contracts. If written incorrectly, you can almost look like a B2B contract between an employee and an employer. But then on the other side of it, between an independent contractors company and their client, that can look less like a B2B agreement and more like a direct employment agreement, which I guess is also wrong. Do you ever see that kind of thing? 

[00:11:42,880] Emily:

Yeah. I mean, so essentially you can have an independent contractor agreement with an individual, but with that can come misclassification risks. So with that can come misclassification risk. So let's say I'm looking to hire someone. Um, but my business is still getting up off the ground. I don't think I can meet minimum wage laws. So I decide to hire someone as an independent contractor. 

[00:12:17,310] Maurizio:

Sure. 

[00:12:18,150] Emily:

Now, if that person is truly in business for themselves, typically meaning they have multiple clients of their own, they supply their own tools like a laptop and phone. They decide when they perform the work, how they perform the work. They're sending you invoices for their time. They're charging you HST. That's going to be a lower risk of misclassification, because all of those things I just described are associated with independent contractors. They're truly in business for themselves. You are a client of theirs. So because they're only working for you maybe five hours a week. Um. It's it's essentially a commercial agreement. Like, you can decide on what that relationship is going to look like. However, if I am, you know, hiring an independent contractor, but I'm expecting them to work for me 9 to 5 every day. I'm telling them what to do, how to do their work. I've given them a laptop, I've given them a phone. I pay them on a biweekly basis, and it looks exactly the same every week. That's going to be a greater misclassification risk, because, you know, that relationship looks more like an employment relationship than an independent contractor relationship. Um, the question the court will ask is, is this person really in business for themselves? So you can hire an independent contractor? But it's it's good to be aware of the risks of misclassification, because what that can lead to is, you know, let's say I've been employing this independent contractor. I end the contractor relationship pursuant to the termination clause in the contract or agreement, which is, let's say, two weeks of notice. But if that classification as an independent contractor is challenged and there's a lawsuit for wrongful dismissal, then there could be liability for things like termination pay, maybe overtime pay owing if hours of work exceeded overtime limits. Um, essentially the court would retroactively apply. Um, all of the benefits conferred by employment standards legislation to what you thought was a contractor agreement. But because of all of these factors that are considered, it turned out to not be a contractor agreement. 

[00:14:36,420] Maurizio:

That could be years. No, if you had them for years as a contractor, is that where that comes up? The misclassification, because we hear it a lot. Um, we'll talk about like employers of record and agencies of record later because that's Oftentimes we're a staffing agency. So you believe me, they do sell to us, right? And a big thing, they're like, oh, misclassification. Misclassification. But when does it actually come up typically in say, a court of law. Like is there some auditor who goes around looking at all these companies, or is it more so come up when, okay, this company is now being sold or this company is being bought and they like they actually start to look through all of their books that things come up where someone gets fired as an example. 

[00:15:14,680] Emily:

Yeah, definitely. So I mean, you nailed it. Like these things tend to come up when an independent contractor, their contract is ended, and maybe they go seek legal advice and decide to challenge their status as an independent contractor. Um, the CRA can also perform audits on your business to see, and they have their own analysis with respect to classification. Uh, because if they find that this person is not necessarily an independent contractor, there could be tax liability 

[00:15:45,600] Maurizio:

because employment tax. 

[00:15:47,000] Emily:

Precisely. Um, and then also, as you mentioned, in the context of either selling your business or trying to secure funding. Um, typically that comes with a diligence process where they'll look at your books, they'll, they'll look at these types of relationships and determine if there is a potential misclassification risk. So in all three of those situations, the issue of misclassification can come up. 

[00:16:12,380] Maurizio:

Gotcha. And are there. So this is very common where you have someone who's either federally registered as a corporation or they're registered only in a province or certain provinces, and the person they hire, we can talk about after if they're outside of Canada, but they might be in a different different province, right? Than than where they're registered. Uh, does that have implications that we can talk about? 

[00:16:35,940] Emily:

Yeah, absolutely. So in Canada, employment laws are provincially regulated. And generally speaking, the laws that apply are the laws of the jurisdiction where the person is actually performing the work. So even if you are registered in Ontario, you yourself are in Ontario, but you decide to hire someone who's working remotely 100% of the time from Manitoba. Manitoba employment laws would most likely apply in that scenario, and there are some common threads between the jurisdictions, particularly the common law jurisdictions. Um, Quebec is our civil law province, so that's very, very different. There are some common threads between the different provinces, but there are also a ton of different nuances. So for example, in Ontario we only have a weekly overtime threshold. So hours worked in excess of 44 per week. Um, if you are an overtime eligible employee that'll be the trigger for overtime. But in a province like British Columbia, for example, there are daily and weekly overtime thresholds, so little nuances like that can pop up. So it's important one to understand that even if I in Ontario, someone who lives in Ontario with an Ontario business and I'm hiring someone across the country, I need to be mindful of how those laws may differ. And two, we see this a lot. Um, if there's someone who has, let's say, a template Ontario employment agreement, they've been using it for their other Ontario employees. They hire someone in B.C., they send them that same agreement. You're going to have an enforceability issue with that agreement because it's written in in accordance with Ontario law, when really most likely B.C. law should apply, that you get into some nuances, with respect to jurisdiction, but that's generally how it works. So it's important to be mindful that even though, you know, you have an Ontario business,  if you're hiring people across the country and internationally to be mindful that those laws likely don't apply. 

[00:18:46,300] Maurizio:

So at the very least, let's say we're talking Canada for now. You want a tailored agreement to each of the provinces that you're going to be hiring people in. So this is where, again, we talked about like what kind of legal partner makes sense for you. That's like another probably big reason where it would be nice instead of again, I'm all for, you know, all different sizes of businesses, but you it would be nice to be able to go to one place, perhaps a slightly larger organization that has entities or operations or specialists in different places where you can go to one place, they can sort you out with everything you need for whatever province that you're going to be doing business in. Yeah, it's probably a little more seamless, a little more organized than having to select technically, I guess, multiple partners across the country, which is probably tough to manage, I would imagine. 

[00:19:31,000] Emily:

Yeah. I mean, it's probably easier to single source than Multi-source, especially at an earlier stage in your business. So yeah, definitely an upside to doing that. 

[00:19:41,960] Maurizio:

Okay. And then this is where maybe we're going to talk about the a little bit of Euro staffer player record. But Canadian business, for whatever reason maybe they have American clients. It's pretty common, right? You have Canadian contractors, American clients. Maybe they want someone locally based. Uh, in the US. Um, technically, you cannot employ someone where you are. Like, you cannot directly employ someone through your business if you're not registered in the same country. Right? 

[00:20:11,750] Emily:

That's my understanding. It's more challenging to do that. Um, so an employer of record would be someone that comes in, sets up business in that country, and then essentially hires someone for you, right? And then staffs that person to your team. So it's a quicker way of entering a market if that's your priority. 

[00:20:29,860] Maurizio:

Right. And again, are there are there is it like, is that real easy or are there risks that you should at least consider when you're choosing? Like if you are going that route, right. And you look at different employers of record, are there things at least you should ask from a legal perspective or get advice from your legal partner when evaluating, say, an employer of record. 

[00:20:53,030] Emily:

Yeah, and I mean, it's going to be the same types of compliance issues. So whatever employer in Ontario for example, again, because things are provincially regulated, regardless of whether it's you or an employer of record, whatever entity is employing that person is expected to comply with the minimum standards set out in employment standards legislation. So it's not necessarily different from a compliance perspective. It's just, you know, are you choosing to kind of outsource the management of that, or do you want to handle it directly? And so there's pros and cons to both employers of record, allow you to do things a bit more quickly. Um, but you are a little bit more hands off. So, it just depends on how much responsibility you want over or oversight you want over that. Um, and then beyond that, it's whatever you agree to with the employer of record. So whatever commercial terms are in are in that contract. So, not different issues, but just being mindful of what's being outsourced. Um, when you are entering into that type of relationship. 

[00:22:08,530] Maurizio:

Sure. Sometimes, you know, it's very common where a Canadian incorporated contractor will have a client in the US, right? And maybe they want to start looking at employing people in somewhere like the US when they don't have an entity there. What what I understand is when you don't have an entity in a given country, you can't legally employ the person there, right? Um, so that's where these employers of record can come in. Uh, they're registered. They're a local entity. Wherever you need to hire someone, they understand the the local laws and they can employ that person for you. You basically have a B2B agreement with the employer record, and they have an employer employee agreement with whoever you wanted to employ. And that's the nature of the transaction. Is it? Is it true that most of that liability is taken on by the employer of record? And if not, are there are there things you still have to consider as a foreign employer of where you may still be liable for? I don't know, whatever. 

[00:23:03,750] Emily:

So a lot of that is going to be dependent on what is set out in the commercial agreement between you and the employer of record. So, employers of record allow you to enter a jurisdiction very quickly because they're already set up there, and you don't have to go through the steps of setting up an entity yourself. Um, but as with any sort of commercial agreement, it's very important to review the terms of that commercial agreement and understand exactly, what the arrangement is. So there aren't any surprises later on. So, a theme of this podcast, you should probably get legal advice on that just so you have a full understanding of. 

[00:23:42,510] Maurizio:

But Specifically a lawyer who understands employment law because you could probably get like a business lawyer, right, who understands commercials probably a little bit better than you. 

[00:23:50,380] Emily:

And understanding of both would be good in this situation. Again, just so, you know, you're understanding what benefits you're in receipt of and also,  what potential liability there is because, wrongful dismissal litigation is quite common, especially, in Canada. It's important to understand what's going to happen between you and the employer of record in the event that does arise and what those steps are going to look like. So, I would just say, understand what you're agreeing to, as you are continuing to build your business and expanding and wanting to do that quickly, right? 

[00:24:30,330] Maurizio:

Yeah. Because there are tons of employers of record. I'm sure small businesses may think that all of them operate the same, which is probably not true blanket statement, but probably not true. Right. Um, there's nuances that you should definitely get legal advice for, but absolutely fantastic avenue. if you need to move into market quickly, this brings up another point with remote work. Does this shake stuff up at all with employment law? Um, whether you're working remotely again in the country where your employer is or maybe it's a foreign employer and you're working remotely in a different country. Is there a lot of funny stuff in that regard when it comes to employing people? 

[00:25:11,030] Emily:

Yeah, I mean, I think we saw this quite a bit over the pandemic, where suddenly people were finding out that their employees were working from Mexico and they had been doing so for eight months. And, one issue being, you know, how do we bring everyone back? And the other issue being, okay, they've been in Mexico for eight months. Um, is their employment pursuant to Mexican law? Um, are there Mexican taxes owed on their employment now? So, short answer. Yes. Whenever you're working remotely in a different jurisdiction for a longer period of time, a lot of employers have set a cap. If they have those types of programs where you can work internationally on the cap being set at 90 days. Um, but it if you have employees that are working remotely and they are doing so for longer periods of time than 90 days, it can absolutely, trigger certain tax implications, certain jurisdictional issues. So it it's definitely something to be mindful of. Um, because it can result in some, some liability. 

[00:26:24,730] Maurizio:

Yeah. And I mean, there are some companies that I've seen, you know, they'll turn a bit of a blind eye where it's like, yeah, this person's registered over here and they're working over there. And you know, we're all online, so we can't really tell. But I mean, in today's world where you can only, you know, use such a good VPN. Like if a company wants to find out where your laptop is, most of the time they can figure it out. You can't really, you know, say that. Oh, I did my due diligence, right. Like, does that play a factor too? In that case, like how how how liable is the company to really make sure they know where their people are working from. 

[00:26:59,540] Emily:

Because the liability would arise from the other countries tax or employment laws? I can't say for sure. Oh, but whenever you're again employing someone and they're working for long periods of time in different jurisdictions, there could be a point where those jurisdictions laws start to apply. And, you know, you're having to maybe seek legal advice in that jurisdiction. Um, if there are certain audits being done by whatever, taxation agency, is in that country, or if litigation arises in that country and they decide to go to the local courts instead of filing in Ontario or in Canada. So it's difficult to say, but it's important to do your due diligence out the gate and, you know, if they are going to be working from a city in Europe, indefinitely, then maybe time to revisit that person's contract, revisit compliance issues. Yeah, exactly. 

[00:28:05,730] Maurizio:

Yeah, yeah. So what's on paper should stand? You can only that's it'll catch up to you, most likely. Right. Um, whether it's the country that you're working in or the country that the person is spending a lot of time in. Interesting. Good to know. Um, so what are some important considerations for a one person tech consulting business to speak about to a lawyer before they start to employ people so they're ready to go, like they're they want to employ someone, couple specific items where it's like, you really should check on XYZ z. Before you do that. 

[00:28:40,830] Emily:

Yeah. So I think two bigger issues lately have been overtime and compliance with overtime laws and overtime pay and then vacation and vacation pay, which can be a little bit complex. So I think number one is understanding how many hours per week, can you ask people to work before triggering overtime laws? And is there an applicable exemption for employees. And that's going to be typically an analysis. So for example there is a managerial and supervisory exemption under the Employment Standards Act. But that comes with a whole analysis. It's not enough to say this is my manager of tech operations and suddenly they're exempt. It's really working 100 hours a week. Yeah, maybe difficult to retain people doing that too. 

[00:29:35,070] Maurizio:

Yeah, maybe. 

[00:29:36,350] Emily:

But yeah, it's an analysis of really what that person does day to day, um, as opposed to what their title says. Um, so that would be number one. Um, because I think a lot of people, they want to grow their business quickly. And even if you have, you know, passionate employees who are willing to put that extra work in if they're entitled to overtime, you can't agree to not comply with the Employment Standards Act like they don't have the ability to waive their minimum entitlements. So understanding overtime pay and then vacation pay laws as well. We're seeing a rise in kind of unlimited vacation policies. Um, however, you still have to comply with the minimum requirements with respect to vacation, time and pay. So the minimum, if you're an employee who's been employed for under five years, is two weeks of vacation per year, and you have to take that within certain timelines. And then if you've been employed for five years or more, the minimum vacation time is three weeks, so making sure people actually take their vacation time is important again can be kind of maybe lost by the wayside if you're a new growing business and everyone's really on board. 

[00:30:50,100] Maurizio:

So making sure that they actually take the time within the year. 

[00:30:53,140] Emily:

Yeah, exactly. Well, in Ontario, it's within the ten months following the end of the. 

[00:30:59,020] Maurizio:

So within two years, they got to take it. 

[00:31:01,000] Emily:

I guess a year and ten months. Yeah, roughly. Um, but it's not only do they have to be paid for that time, they actually have to take it. Right. Um, and then making sure you're paying out vacation pay, properly. So you actually can't technically do the most common form of paying vacation pay, which is just salary continuance through the vacation period without entering into a written agreement to do so. So that's one of the things that, you know, if you set that out in the employment agreement right off the hop, this is how we're going to pay vacation pay. And you agree to be paid vacation pay this way. then you have a written agreement and you've complied with that. Um. However, there are also minimum standards associated with vacation pay as well. So for employees under five years of service, it's 4% of wages. And wages include salary, bonus,  most forms of remuneration. And for someone with five plus years of experience, it would be 6%. Uh, so there are kind of a few different entitlements. 

[00:32:05,000] Maurizio:

And you have to accrue or can you give it to them right off the bat? 

[00:32:07,680] Emily:

you don't have to You don't have to. Accrue, you can allow them to take it right off the bat, like the Employment Standards Act just sets the minimum. Gotcha. So this is the absolute minimum of what you have to do if you want to build on top of that and, and give employees, greater perks and benefits. You can do that. 

[00:32:24,360] Maurizio:

Gotcha. Understood. Yeah. Because it's funny,  in some sales organizations, I remember some people would end up with like, massive vacation payouts at the end of the year because of bonuses and commission and all that kind of stuff, and the way that it didn't make sense to me at the time. But I guess from what you're saying, makes a lot of sense, where if you're accruing 4% of whatever your compensation is and the person has a really, really good year, you know, to take all the vacation in one year, they wouldn't even be working, right. So they end up getting like a big a big payout at the end. So that's that's kind of funny. What about, what about AI and all the stuff people are doing with AI? We spoke on on another podcast with a different lawyer about the danger of writing business contracts with AI. 

[00:33:08,500] Unknown Speaker:

[00:33:09,300] Maurizio:

You see people trying to do stuff like that with their employment contracts. Can you say that? 

[00:33:13,960] Emily:

I mean, I have, I have seen it, I've seen it with policies too. And I get it, it's tempting. You know, I've used ChatGPT as well. Um, and it is, you know, a very cool tool. Um, and, you know, I understand the temptation, however, Something like AI isn't going to necessarily know the best practices. They're not necessarily going to get the law right. It's the type of thing where even if you're going to use it as a starting point, have it reviewed. Just like I wouldn't necessarily say you can Google something and then do it yourself. If you're not having those types of agreements reviewed by a lawyer, you are likely taking on more liability than what you need to do. So I would be very cautious when using AI, particularly and I'm sure you guys discussed the risks in a commercial sense. Um, but when you're looking at something like an employment agreement that is held to a higher standard than commercial agreements, there are definitely going to be risks associated with that. So tread carefully. Um, it's it's a what is that expression? Um, something about a penny pinch. Salt pound. 

[00:34:34,000] Maurizio:

I know where you're going with it. I don't know the expression, but yeah, like, take it easy with with the ChatGPT and maybe just get. It done properly. I imagine personally, it's more if I'm gonna spend all this time on on and I'm not knocking it. It's good for tons of stuff. But if I'm gonna make a contract that may not be legally sound, then I got to take it to a lawyer to review it, rip it apart, basically rebuild it. It may have taken less time and potentially maybe could have been cheaper if I just said, hey, can you give me your. Yeah, pay you this, give you your stock agreement. 

[00:34:59,540] Emily:

Yeah. Very well. 

[00:35:00,340] Maurizio:

Could be and it might be. I might be in a better spot than all this other hours of reviewing something I've given you that may or may not be sound, right. 

[00:35:07,740] Emily:

Yeah. And sometimes, you know, we make that recommendation. We see, you know, this is a template from somewhere, whether it's from AI or from some other source. We would recommend you use this template that we have ready to go. And we can kind of customize that from there. So yeah, sometimes there will be that trade off. Sometimes people really like what they've used before and they've used it in other jurisdictions. Like it's very common to have someone come in and say, hey, this is the template we use in the US. We want to, you know, employ people in a similar capacity as possible in Canada. Can you please just make sure this complies with relevant employment laws? Yep. We can definitely do that. But in a situation where someone's kind of just starting out,  they're hiring someone for the first time, maybe it's it's going to likely be more worthwhile if you start off with something that's been recently reviewed, freshly drafted, up to date with employment laws, which are constantly changing because there is so much wrongful dismissal litigation. We're always getting new case law on okay, this type of termination clause isn't enforceable. This type of language is enforceable. This is compliant or not compliant. And we're always getting new case law. So things are always changing too. Um, so likely worth it to speak to a lawyer and avoid the temptation of 

[00:36:34,220] Maurizio:

Yeah, that's a good point. Because if you're, you're dealing with all these cases, right, at a, at a big firm, every time something new comes in where it's like, oh, maybe there was a gap there, a gap there, obviously that that gets fixed. So the tighter contract you'll have is probably that that up to date one, you get a lot of American companies who want to employ people in Canada. Or is that outside of your specialty? 

[00:36:53,260] Emily:

No. Yeah. We get a lot of American companies that want to come in and either start an entity or expand a Canadian entity and really kind of get their operations running. And there's a lot of differences between Canadian and US employment law. From what I understand, US employment law is state based as well. That's the jurisdiction that's applicable. But in a lot of states, from what I understand, they have something called at will employment, which means you don't have to provide anyone with notice when you finish, their employment. A lot of people do provide packages and things like that, but the baseline is zero, meaning you could call up an employee on a Friday and say, today's your last day and there's no notice or pay in lieu required, which is quite different from Canada because in Canada, if you've worked, more than three months, it differs slightly province to province. In Ontario, it's three months less, less a day, that triggers certain termination entitlements. So let's say you've been working for a company for six months. Um, under the Employment Standards Act. Um, if your employment were terminated at the six month mark, you would be entitled to either, a week of notice. So I'm letting you know on the Monday that next Monday is going to be your last day of work, and then you work through that period. That's your notice period or pay in lieu. So what's more common is someone will say, hey, you know, today's your last day, but we are paying you a week in lieu in accordance with the Employment Standards Act. And so and that entitlement goes up the longer you've been working for that employer, and it caps out at eight weeks. and then once someone's been employed for five years, in Ontario, one of the few jurisdictions in Canada that requires statutory severance pay, that payment kicks in at the five year mark as well. So a lot of this information, is new to US employers and it is very different. So, although we are neighbors, we can differ quite a bit with respect to employment law. So, you know, there's a lot of education that can go into that type of thing. And just level setting with respect to how our employment laws work here. 

[00:39:10,490] Maurizio:

Sure. Most of them get it, though, like they can kind of get on board with the difference or just some of them really struggle with with the way things are done here. 

[00:39:19,050] Emily:

I mean, it depends like person to person, business to business. Um, if you've only been operating in the US, it can be quite jarring. Yeah. Um, if you've been operating in other countries. Um, then, you know, you kind of know that things can differ particularly like. And again, I don't know much about this because employment law is so jurisdictional in nature. Um, the EU has very different employment laws. The UK has. Very different employment laws. Yeah, yeah. Working for a Spanish company. I'm sure you, you know. 

[00:39:51,430] Maurizio:

Germany was actually the funniest. Really place. Yeah. No, that's the only, the only client I've ever had. That said, I really want to fire this guy, but I can't do it. Can you take, like, this is my client I hired for this person? he's like, can you poach this person from my team and get him somewhere else? And I'll let you I'll let you backfill the the thing because I cannot fire him. He's been here forever. This person, you know, like it's the x, y, z problem. But the laws here are just too tough. 

[00:40:18,310] Unknown Speaker:

[00:40:18,870] Maurizio:

Um, that was the only time that's ever been said to me, obviously in confidence. I didn't do that. The person found their own job. It's fine. But yeah that was you know, an example where it's very, very different from from here. Right. Or the States for that matter? 

[00:40:32,040] Emily:

Yeah, likely more and more similar to to here, but, yeah, it can definitely be a learning curve. Yeah. Um. For sure. 

[00:40:40,730] Maurizio:

Yeah. Yeah. Great. Well, thanks for for breaking this all down. I think, outsider looking in, there's obviously a lot of information that we don't see goes over our head. Right. And same thing with our contractors. They could think a process that seemingly looks so simple because maybe their peers. Oh, they hired this person. Hire that person, fire this person. Fire that. Simple, right? But like you said, right. It's all good until it's not. And as soon as an issue is raised, if you didn't have all your ducks in a row the whole time, like, there are implications that can go years and years back and affect you greatly. And that's not what you want. When you're starting a new business. You want to scale, you want to grow. You don't want everything to fall down. If someone pulls out one of the Jenga pieces. Right? So, thanks for going through this with us. This is great. Appreciate it. 

[00:41:25,010] Emily:

Happy to be here. And, nice to see you again. 

[00:41:27,730] Maurizio:

Yeah. Big time.