Ready to hire? Essential tips for hiring your first employee

As startups grow, there comes a time when founders are unable to do everything on their own and decide to hire their first employee. Reaching the stage of hiring the first employee can be a significant, and exciting, milestone for a startup. In this post, we outline five considerations for hiring your first employee:

1. Consider whether you want an employee or an independent contractor

Before taking steps towards hiring your first employee, it is important to consider whether you intend to hire an employee or an independent contractor. Generally speaking, the key distinction between an employee and an independent contractor is the degree of control the hiring party exercises over the worker. An employee typically works under the direction and control of the employer, whereas an independent contractor maintains autonomy over how and when the work is performed.

The decision has a number of implications. For example, if an organization chooses to hire an employee, employment standards legislation will govern the employment relationship. Employment standards legislation governs employee entitlements such as vacation pay, public holiday pay, overtime obligations and termination notice. Another consideration is that the employer will be required to deduct taxes from employees but not for independent contractors. Because contractors provide services, they are required to remit their own taxes.

This is an important decision to make up front, as mischaracterizing the relationship can expose an organization to significant legal and financial risk.

2. Create a job posting that clearly sets out the job duties and expectations

A detailed, descriptive and clear job description for the position sets the groundwork for clear expectations for the employee and the organization. You will be investing – both time and money – in your first employee and want to ensure that the expectations are clear from the outset.

The job description also serves as an opportunity for an employer to set out certain conditions of employment. For example, a job description can set out whether an offer of employment is conditional on the employee providing a clear criminal record check, valid driver’s license or proof of eligibility to work in Canada.

3. Prepare an employment agreement

A well-drafted written employment agreement is one of the most important tools an employer can use to establish clear expectations and reduce the risk of costly disputes down the road. There are significant benefits to employers and employees when the terms and conditions of employment are clearly set out in writing. A properly drafted and legally enforceable employment agreement can clarify expectations, define employee entitlements and obligations, and help limit or quantify an employer’s potential liability.

An employment agreement allows an employer to establish terms and conditions of employment, including but not limited to:

• Job title and duties
• Conditions of employment
• A probationary period for new employees
• Schedule and hours of work
• The employee’s compensation entitlements
• Reporting relationship
• Vacation entitlements
• Termination entitlements
• Workplace policies
• Obligations of non-disclosure, non-solicitation and other restrictive covenants, where applicable

As noted above, employment agreements can incorporate workplace policies and procedures by reference, with copies of the policies being provided to the employee at the same time as the employment agreement for acknowledgment. Written workplace policies help employers establish clear expectations and maintain consistent standards within the workplace. They also help employers and employees avoid discrepancies or uncertainties surrounding matters such as vacation, expense reporting and benefit plans. In some cases, workplace policies are not merely a best practice but a legal requirement. For example, provincially regulated employers in Saskatchewan must maintain workplace harassment and violence policies.

The written employment agreement should be provided to an employee prior to the first day of work, and it should be signed and returned to the employer before the first day of work.

4. Unless your organization is exempt, ensure that you have WCB coverage

It may be necessary to open an account with the workers’ compensation board in your province. Generally speaking, in the Western Canadian provinces, unless your organization is exempt, you will be required to pay workers’ compensation premiums on behalf of your employees. Workers’ compensation insurance coverage is a no-fault insurance system that protects both the employers that pay premiums and the workers who receive benefits. Workers’ compensation coverage will provide benefits and services to an employee for a work-related injury or illness. Workers’ compensation coverage will generally act as a statutory bar and protect an employer from employee claims related to workplace injury or illness.

5. Consider occupational health and safety obligations

Understanding occupational health and safety obligations is essential for new employers because providing a safe workplace is both a legal obligation and a key component of a successful business. Generally speaking, employers are required to take reasonable steps to protect workers from workplace hazards, provide appropriate training and supervision and respond effectively to workplace incidents. A strong understanding of occupational health and safety obligations can help prevent injuries, reduce the risk of regulatory penalties and liability, and foster a workplace culture where employees feel valued and protected. By prioritizing workplace safety from the outset, employers can create a safer, more productive and legally compliant work environment.

These five tips are only a starting point that outline some considerations for hiring your first employee. Every organization will have a unique set of considerations, depending on factors such as the industry within which the organization operates, location, needs and future plans. Our Labour and Employment team can help you respond quickly and effectively to workforce challenges, providing proactive, practical and innovative advice and assistance on all labour and employment matters – including hiring.

MLT Aikins is also proud to offer new businesses access to our Startup Advantage Program. Whether you’re looking to start with a firm foundation, scale up or secure funding for the future, our Startup Advantage legal team uses customized technology at fixed-fee pricing to handle the legal complexities of starting a business so you can focus on realizing your vision.

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