Business Talk: You’re hired. You’re fired!
How to manage the expansion and contraction of your practice
By Anthony Lombardi
Throughout the course of our practice, we will be going through staff changes. It is important to know your rights and responsibilities when considering hiring and/or terminating employment of associates or staffmembers.
You have a massage therapist or associate chiropractor who has been with you for five years and you are finding that you could be making better use of the room they are using. How do you go about changing their hours or asking them to leave altogether?
A receptionist who has been with you for 10 years has been creating drama within the clinic and it’s starting to affect the day-to-day business operations. How do you properly sever their employment?
Scenario one is interesting because it’s one that we will likely experience by being either on the clinic owner side or the associate side. To begin with, your associate chiropractor, massage therapist or physiotherapist should be on an independent contractor agreement. This will not only be a tax advantage to you, it will also absolve you from paying employee benefits and government taxes – and make it easier to let them go.
For your associate practitioners to be classified as an independent contractor you need to have a signed agreement in place, which ensures the independent contractor is able to do the following:
- set their own schedule
- use their own equipment
- submit invoices to the owner reflecting work completed
- remit their own taxes to the government
- demonstrate a certain amount of risk or individual investment, i.e. if they do not see any patients they do not get paid.
An independent contractor agreement is absolutely necessary. The contract must outline expectations from the very beginning signifying all parties were aware of and understood the position description.
An independent contract agreement should include: duties and responsibilities; explanation of service offered; remuneration and benefits; handling of confidential material; termination clause.
Email me at firstname.lastname@example.org if you would like me to send you a copy of the lawyer-drafted template I use for signing all of my independent contractors.
Scenario two examines how to safely terminate an employee. An employer can fire (or change the employment relationship of) an employee or contract worker at any time, as long as the employer provides them with fair compensation as determined by the Ontario Employment Standards Act and common law. The Employment Standards Act sets out the minimum requirements. The notice can be given a number of different ways – lump sum payment, working notice or salary continuation. It can also be a combination of any of these things.
In fact, the reasons for the termination are completely irrelevant, according to lawyer Sabatina Vassalli. She said: “The reason for termination of employment is really not relevant unless human rights have been violated. It just boils down to if they are paid enough money and/or given enough notice. This often makes employees furious.”
There are several factors to consider when an employer is comtemplating employment or contract termination.
Level of specialization
The CEO of the company gets more compensation than the cashier at McDonalds. Their duties are implicit in this. Managers and upper level staff are entitled to more compensation. When severing ties with one of your employees, answering the following question is vital in preparing a severance package: How many other people can do this job?
In lieu of monetary or other valuable compensation, you may give your employee “working notice” in place of firing them. For instance, if an employer approaches the worker and says, “in nine months we will be cutting your hours from 40 hours a week to 0 hours a week,” then this is referred to as the amount of paid notice the worker will receive while still working over the course of those nine months before their hours change. Essentially, the expectation is that the worker will use this notice period to find another job to replace the lost income – or to accept the change. If the employee does nothing in this case (where an important term of their employment relationship has changed, i.e. wages), they are said to have condoned or accepted the change. They have a limited amount of time to dispute the change.
Q&A with a lawyer
To gain more understanding on this important topic, I interviewed Sabatina Vassalli, a lawyer from Hamilton, Ont. She practices civil litigation and specializes in employment law. You can e-mail her at: email@example.com.
How is fair compensation usually calculated for an employee or contract employee?
Using the factors of length of tenure, level of specialization, age of employee, likelihood of re-employment, I will usually give a range of what the appropriate amount of notice is. The minimum requirement of the Employment Standards Act is anywhere from one week to eight weeks (it can sometimes be more depending on certain criteria). The common law rule of thumb (which can sometimes mean a little more or a little less) can be up to one month per year of service. That would be the top end (for the CEO, manager, etc.). The maximum for common law is 24 months.
How is severance paid?
It can be paid a number of ways. Lump sum payment is made to immediately get them off the books. It can also be paid through salary continuance that stops when they find another job.
Can an employer slash employee hours without notice?
It is against labour law to cut an employee’s hours without prior working notice or without compensating them fairly based on the factors stated above. It is contrary to the Employment Standards Act and common law to do so. It is considered a constructive dismissal.
How much working notice should be given so the employer does not have to pay any additional severance?
Once the range has been figured out. You just offer the same amount of working notice or a little bit more to cover your bases. Working notice should only be used in the right circumstances. If you think they are going to come in for three months and do nothing or be uncooperative, then don’t bother. They should be allowed time off to attend interviews. If they find a comparable job before the end of the working notice, they quit, and you are free and clear.
What are the fundamental differences between an employee and an independent contractor?
The biggest factors are financial risk and level of control. If hustling means the individual earns more and they have control on how much and when they hustle, they are properly treated as an independent contractor.
This is a topic that many chiropractors are uneducated about. This is why you need to consult an employment lawyer for any questions regarding dismissal or hiring of workers. Please use this article only as a guide and save your questions for the lawyers.
Dr. Anthony Lombardi, DC, is consultant to athletes in the NFL, CFL and NHL, and founder of the Hamilton Back Clinic in Hamilton, Ont. He teaches his fundamental EXSTORE Assessment System and conducts practice-building workshops to health professionals. Visit exstore.ca for information.