News & Views
BILL 148 - New Vacation and Personal Leave, Updating Your Employment Contracts
Written by Ryan Hanna
Bill 148 or otherwise the Fair Workplaces, Better Jobs Act 2017, came into force on November 22, 2017. That Act has brought with it significant changes to employment law in Ontario.
If you are a business owner with employees, an HR Manager or even an employee, you are likely already dealing with some of these changes on a day to day basis; however, have you updated your employment contract(s)? If not, you should definitely be considering the important ramifications of Bill 148 on those agreements. This is particularly important when it comes to the application of the Employment Standards Act, 2000 (The “ESA”). Some of the changes imposed by Bill 148 could cause existing employment contracts to suddenly be unenforceable due to non-compliance with the ESA, potentially exposing an employer to liability and costly disputes.
One item worth reviewing and changing where necessary is the vacation clause. Many standard contracts in Ontario, in order to comply with the ESA, provide for 2 weeks of vacation in a 12 month period; however, Bill 148 has now expanded that to add a third week of vacation entitlement in a 12 month period to any employee who has worked continuously for an employer for more than 5 years. That vacation time is accrued at a rate of 1.25 days per month and at a rate of 6% on eligible wages. It is important to keep in mind that a “period of employment” of 5 years is calculated taking into consideration active and inactive employment (thus including things such as pregnancy and parental leave).
To address the vacation changes, a highly recommended modification to any employment agreement which currently only provides for 2 weeks of vacation is to insert language indicating that the 2 week period is an “initial vacation entitlement” and that the employee’s entitlement will be subject to and in compliance with the ESA. This kind of clause ensures that the contract is flexible going forward and that it can adapt to an employee reaching the 5 year threshold. It also preserves the contract in the event other changes arise in the future.
Where the employer provides more vacation than the statutory entitlement, the contract should also reference the fact that any vacation taken will count first in respect of statutory entitlements.
Over and above vacation entitlement, Bill 148 has expanded the types of personal leave available to employees (i.e. Domestic or Sexual Violence Leave) or has otherwise increased leave in other areas (i.e. Child Death and Disappearance Leave). These changes and additions do not need to be spelled out in the employment contract. Employee handbooks or policy manuals are usually better suited for this purpose. However, in order to ensure there are no problems in the future, such as doubling up on leave, where the employment contract stipulates specific sick or personal days the contract should also indicate if an employee’s statutory entitlements are included or not included in the leave the employer has set out in the contract.
Finally, although such sweeping changes as those arising from Bill 148 are not a common occurrence, they demonstrate the need to keep the language in contracts flexible. Wherever specific ESA minimum standards exist, a statement that the clause is subject to compliance with those minimum standards continues to be one of the best ways to protect that clause or contract from invalidity. You never know when smaller, less noticeable, legislative changes could affect a contract. For employers that use templates, we generally recommend that the terms are reviewed every two to three years to ensure compliance with new or changing rules.
* The material provided in this article is for general information purposes only. It is not intended to provide legal advice or opinions of any kind
About the Author:
Ryan Hanna, regularly acts on a range of legal matters where he maintains a business oriented focus to his litigation practice, assisting clients with commercial disputes ranging from shareholder actions and wrongful dismissal claims to secured and unsecured debt enforcement, residential tenancy disputes, commercial leasing matters, and trademark infringement.
Key Due Diligence Items When Purchasing Commercial Real Estate
Written by Stephanie Furlan and Leslie A. Fluxgold
Due diligence is a vital form of risk management. It allows a prospective buyer to audit the property’s affairs before purchasing, in order to mitigate future liability. To complete a proper assessment, it is recommended that a sufficient time frame be allowed. The following are key due diligence items that should be considered before closing any real estate transaction:
1. Environmental Site Assessment
It is recommended that an environmental site assessment (“ESA”) be conducted according to the customs of the Canadian Standards Association. If a lender is involved, an ESA is usually a condition of funding. ESAs help to identify any contamination issues with the land, which may be costly to remedy. Two phases of assessment may be involved.
A Phase I ESA consists of a surface-level assessment that identifies any potential contamination risks by exploring past and present land uses. It consists of a non-intrusive site inspection of the property and surrounding lands, records review, as well as interviews with the site owner or other persons with knowledge of the property. A report will document potential issues with the land, if any. A Phase I ESA will identify if further investigation is required.
A Phase II ESA is generally conducted after the Phase I ESA outlines the scope of investigation required. A Phase II ESA is also recommended if a property housed any industrial activity in the past, due to the increased risk associated with hazardous waste displacement. It usually involves a sampling of the land, including soil and groundwater. It is helpful in determining whether any conditions on the site are causing adverse effects that may warrant further action on behalf of the buyer. A Phase II ESA also consists of reviewing the report provided in the Phase I ESA and compiling a final report for review.
If contamination or other hazardous materials are discovered during a Phase I ESA, a Phase II ESA may become critical before a transaction can close.
2. Building Condition Report
In addition to assessing the land, any existing buildings on the land should be inspected for compliance with industrial standards. Building condition assessments assist in the valuation of property by evaluating whether existing systems are working adequately. Similar to environmental assessments, they may be required by the lender. Full awareness of the building’s condition is especially helpful in determining the scope of work if renovations are expected.
The final report will disclose if any repairs or other construction must be completed for the building to conform to industry standards. Reports will typically assess the following: site and grounds, building exterior and interior, mechanical and structural systems, fire code, and regulatory compliance.
3. Zoning and Land Use
Zoning governs the use and division of land and clearly impacts land development. Local zoning by-laws provide a description of the permissible density on a parcel of land as well as its allowable uses. Further, they place restrictions on the height of the proposed improvements, the location of structures and utilities, lot sizes and dimensions, and parking requirements.
Buyers must ensure that the intended use of the land, and the buildings thereon, comply with current zoning by-laws. Relevant documentation, surveys, and permits should be compiled and reviewed during a due diligence period.
Most commercial transactions require financing, and there are a few valuable points worth noting. First, an initial budget should be created with an accountant to determine affordability of a transaction and the availability of financing to assist in the acquisition. Oftentimes there are unforeseen challenges that arise during a transaction, so buyers should ensure that they plan an allowance into their budget for the purchase.
Before waiving a due diligence provision with the vendor, it is essential that the buyer involve its lender. The lender generally requires that certain conditions be met before it confirms the availability of funding and these are sometimes overlooked. These often include the specific environmental, zoning or building condition assessments as mentioned above. The terms of financing should be outlined in a loan commitment, as opposed to a term sheet or lending proposal. A loan commitment is a legally binding commitment on the part of the lender to lend for the purposes of assisting in the acquisition of the particular property and sets out the terms of the loan and security requirements.
If you would like to learn more about any of these issues or others associated with a commercial real estate transaction, please contact Leslie A. FLuxgold at firstname.lastname@example.org or 905-763-3770 x210 to discuss the matter in further detail.
* Environmental Site Assessments. Ontario Real Estate Law Guide (2018).
*Zoning and Land Use By-Laws. Ontario Real Estate Law Guide (2018).
*The material provided in this only. It is not intended to provide legal advice or opinions of any kind.
About the Author:
Stephanie Furlan is our summer student, assisting with all areas of practice.
Leslie A. Fluxgold is a respected advisor to the business community, with a focus on commercial real estate and commercial lending. Les has the expertise and hands-on experience to guide clients through complicated real estate matters and commercial loan transactions.