As Business Lawyers our firm often has to tell clients there are certain things they have to do, even if they don’t want to.
The most frequent conversations of this nature are:
1. You cannot contract out of the Employment Standards Act
Yes, that means everyone. Yes, that means that if you’re terminating an employee without cause, you have to provide notice (or payment in lieu of notice) and in some cases severance. This also means that you must abide by the law regarding overtime, breaks and leaves.
Some clients will follow up the “do I have to” question with the “what happens if I don’t” question. The answer depends on the forum in which the employer finds themselves in the event of breach. For example, if the employer is sued, a Court may award punitive damages, which are literally an award of money to the former employee to punish the bad behavior of the employer, for breaching the Act.
The Ministry of Labour is more likely to simply require the money that was to be paid, if the Act had been followed, be paid.
2. You cannot Contract out of the Construction Lien Act
Once again, yes, that means everyone.
The Construction Lien Act has a provision built into it that the Court can insert into the Construction dispute the provisions of the Construction Lien Act to ensure compliance.
The most common example of this is the failure to comply with the holdback requirements of the Act, often because the owner of the property is unfamiliar with their obligations. In over 23 years of litigation, this is probably the area of law we most encounter individuals who should be using lawyers to draft contracts, but don’t. This is usually because the owners are on a budget for a repair or construction and don’t understand the value of learning about their rights and responsibilities until it’s too late.
I always say “it’s cheaper to pay for legal advice before a law suit, than to respond to a law suit” and this is particularly true in construction litigation.
3. You can contract out of the Interest Act but you won’t like the end result
If you express interest in a contract as 2% per month, the Court will not enforce that interest rate in a Court Order. You will receive the Courts of Justice Act rate which is currently 0.5%.
However, if you express the interest rate as 2% per month (24% per annum) the rate is now enforceable. Why? Because the Canadian Interest Act requires interest be expressed as an annual amount.
This is an easily corrected issue and one that we are frequently bringing to the attention of our clients.
There of course numerous other pieces of legislation that must be complied with: this is why you need to consult a lawyer before taking on a new Business venture. You will save yourself a lot of unpleasant surprises if you are educated before being sued.