Running a Startup in Ontario? Read These 10 Rules

Navigating your startup amid Canada's changing unemployment law.

Employment Law Tips for Ontario Startups

Mihkel Holmberg

June 20, 2018 09:32 AM

Running a startup isn’t easy. As the business owner, you need to wear many hats, acting as the accountant, running payroll, and filling in wherever else to get the work done. When your attention is spread across so many areas, you may overlook small problems that could turn into legal issues later. We’ll take a look at some employment law tips and best practices that all Ontario entrepreneurs need to know.

1. Customize contracts at all times

While it’s easy to go online and download a contract of employment, remember that it might not specifically address your business needs. Each organization is different and as such, you should take time to create custom employment contracts for all your workers. The employment contract should contain details of the current changes in employment law. If possible, get the advice of an employment lawyer in Toronto on their implementation and seek clarification to avoid problems later.

2. Come up with an employee handbook

An employee handbook is one of the most important resources an employer can utilize. It helps the entire organization to understand what is expected of them and gives the company the chance to outline its policies in detail. This handbook should be comprehensive so that employees will not need to question anything that was already formally put in writing.

3. Protect your intellectual property

It is important for every employer to have a comprehensive intellectual property agreement. The employee’s contract should cover areas such as ownership of intellectual property, the scope of confidential information, and restraint on competition. For instance, the contract can restrain any former employee from ever creating a brand that competes with the employer for a specific duration or over a geographical area. However, such laws must be properly formulated because the restraint can be deemed invalid if the duration is too long or it operates over a very large geographical area.

4. Document important information

Every employer should ensure that detailed records are kept on matters such as training and development or appraisals as well as absence. For instance, keeping track of an employee’s absences can help to identify key individuals who are likely to benefit the business and streamline other processes like appraisals.

5. Hire the right people

It’s very easy for small businesses, especially startups, to hire employees who turn out to be a nightmare simply because they don’t follow the right rules. To avoid this, you need to have very clear job requirements. A person should have a clear idea of what they must do in their role even before they begin working for you. Further, you should create candidate profiles and come up with an interview plan for each person you want to hire. Not all employees will be interviewed in the same way. However, you need to use the same criteria to evaluate employees before hiring them to avoid any problems in the future.

6. Invest in training for managers

As a small business, you may not have the resources to create a full-fledged HR department. However, even if you don’t have any full-time HR personnel in your business, you should always keep up with employment law changes lest you find yourself in trouble. The best way to do this is by training your current managers. Investing in this training ensures that they are well equipped with up-to-date information that will help you be in accordance with Canada’s employment law.

7. Have a detailed procedure for dismissal

Terminating employees is never a fun process for any business owner or HR personnel. However, it is inevitable since not every employee will be a good fit for the organization. If you already have an employee handbook, it should have an outlined procedure for terminating an employee. You also need to consider the current employment laws and regulations before dismissal. Doing this will avoid wrongful dismissal claims that could set back the company.

8. Know the current employment laws

The employment laws and regulations in Canada are constantly changing. These changes over the years have offered protections to both employees and employers in different situations. It is important for you as the business owner, manager, or HR employee to keep up to date with employment law. You may even want to consider hiring an employment specialist who will help to ensure that you are always compliant and avoid potential liability.

9. Work with the right professionals

As a business owner, you may not have the time or knowledge to develop expertise in employment law. And because your startup may not afford a full HR department, it is important to engage the right adviser just to be sure that you’re not going against the law. Cases such as wrongful dismissal can cause the company to shut down, especially a startup. When you invest in the right professionals, you will save money and time for your business in the long run. Partnering with a business lawyer in Toronto not only allows you to get practical and professional advice but also shields you from potential liability.

10. Enjoy the experience

It’s always a good idea to engage with your employees. As you discuss these issues, don’t forget to have fun. Engaging with your employees not only helps you to understand their needs better but it also helps maintain the right kind of energy in the workplace. Take steps to make your employees feel appreciated in the workplace by rewarding them for their good work.

Building a business is far from easy—but it can be quite rewarding. If you do decide to start a business, you need to partner with the right people who will help you reach your vision. With the ever-changing employment laws and regulations in Canada, you’ll need to work side by side with a business lawyer. Remember that ignorance is not a defense. Engage with the right adviser and save your business from unnecessary liabilities.


Mihkel Holmberg’s practice encompasses a broad range of business practice including the purchase and sale of businesses, corporate and commercial lending, private equity transactions, business reorganizations, succession planning, and estate administration. A significant part of Mihkel’s practice involves complex mergers and acquisitions. He has acted as lead counsel on literally hundreds of business acquisition transactions, involving a broad range of businesses from owner managed, privately held corporations to large multi-national corporations valued in excess of $500 million.

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